Limitations on liability | Spain | Global Private M&A Guide - Limited External Content

Limitations on liability

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What is the common cap amount (as a percentage of purchase price)?

Frequency/market practice: It depends on the particulars of each transaction. In general terms, it is not unusual to see ranges from 10% to 50% of the purchase price in larger deals and up to 100% in small deals.

Does the cap (and other liability limitations) apply to the whole agreement or just warranties (or particular terms)?

Frequency/market practice: They usually apply to warranties only.

What are the common exceptions to the cap?

Frequency/market practice: Key warranties are often excepted (e.g., title, capitalization, authority). Tax and other specific areas of concern/identified liabilities generally are not capped or have higher caps.

Is a deductible or basket common?

Frequency/market practice: Both are common.

Is a de minimis common?

Frequency/market practice: Fairly common.

How long does seller liability survive?

Frequency/market practice: Fairly common; a general survival of 12 to 24 months is common.

Are there any common carve-outs from limitation on seller liability (e.g., fraud, tax, key warranties)?

Frequency/market practice: It is common to carve out fraud, tax and social security (statute of limitations).

Is warranty insurance common?

Frequency/market practice: Warranty insurance is increasingly seen in the Spanish market and is becoming more popular in certain deals (for instance, when the seller wants a clean exit).

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