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: Usually between 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 generally apply to misrepresentations, with specific caps sometimes set for special indemnities, while breaches of covenants are typically uncapped.

What are the common exceptions to the cap?

Frequency/market practice: Common exceptions include fraud, willful misconduct, fundamental representations, anti-bribery matters, covenant compliance, and specific special indemnities.

Is a deductible or basket common?

Frequency/market practice: Both are common.

Is a de minimis common?

Frequency/market practice: Increasingly common.

How long does seller liability survive?

Frequency/market practice: A general survival period of between 18-36 months is common, with certain matters instead following the applicable Colombian statute of limitations (e.g., employment, tax, environmental).

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

Frequency/market practice: Very common. Tax and environmental matters are often carved out or assigned separate, specific liability caps.

Is warranty insurance common?

Frequency/market practice: Rarely. However, we are seeing an uptick, particularly in energy, oil and gas, and infrastructure.

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Colombia

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