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

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

Frequency/market practice: This ranges typically around 10%-30% of the purchase price.

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 misrepresentations and sometimes specific caps to special indemnities.

What are the common exceptions to the cap?

Frequency/market practice: Common exceptions include fraud, willful misconduct, fundamental representations (e.g., title, capitalization and authority), Foreign Corrupt Practices Act (FCPA) or anti-bribery, compliance with covenants and specific special indemnities.

Is a deductible or basket common?

Frequency/market practice: Baskets are becoming increasingly common. Deductibles are fairly common.

Is a de minimis common?

Frequency/market practice: Increasingly common.

How long does seller liability survive?

Frequency/market practice: A general survival of 18-36 months is common. The seller liability survival period may also be subject to specific statutes of limitations under Colombian law (e.g., three years for individual labor rights).

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

Frequency/market practice: Fundamental representations, tax and labor are liabilities usually tied to the expiration of the statute of limitations.

Is warranty insurance common?

Frequency/market practice: Warranty insurance is becoming more common.

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Colombia

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