What is the common cap amount (as a percentage of purchase price)?
Frequency/market practice: This is largely dependent on bargaining power, extent of due diligence and risk-sharing. The amount is typically 10%-30%, but also possibly up to 50%, subject to a higher cap for title and specific representations and warranties.
Does the cap (and other liability limitations) apply to the whole agreement or just warranties (or particular terms)?
Frequency/market practice: They usually only apply to warranties.
What are the common exceptions to the cap?
Frequency/market practice: Key representations and warranties are generally excepted (e.g., title, capitalization, authority). Often, tax and specific areas of concern are also excepted, sometimes with specific higher caps. Separate caps can be negotiated.
Is a deductible or basket common?
Frequency/market practice: Deductible is more often resisted and a tipping basket is more common.
How long does seller liability survive?
Frequency/market practice: The general survival is 12-24 months; there are typically longer periods for title and tax than general representations and warranties. There may be a special duration for other representations and warranties on a case-by-case basis, e.g., on environmental issues.