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

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

Frequency/market practice: A cap on indemnification liability not to exceed 100% of the purchase price is fairly common.

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

Frequency/market practice: A cap on indemnification liability on the entire agreement is fairly common. Certain indemnifications for tax, labor and environmental-related liabilities rarely have their own cap that may compute as a separate additional cap to that applicable to the rest of the representations and warranties.

What are the common exceptions to the cap?

Frequency/market practice: Fairly common; representations and specific areas of concern, particularly tax, environmental and labor-related matters, are common exceptions. For cross-border transactions where the target has operations abroad, product liability might be an exception.

Is a deductible or basket common?

Frequency/market practice: Fairly common.

Is a de minimis common?

Frequency/market practice: Fairly common.

How long does seller liability survive?

Frequency/market practice: A general survival of 12-36 months is common. Tax, labor and environmental liabilities are usually tied to the expiry of the statute of limitations period (normally five years).

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

Frequency/market practice: Tax, labor and environmental liabilities are usually tied to the expiry of the statute of limitations period (normally five years).

Is warranty insurance common?

Frequency/market practice: Rarely; warranty insurance is a new product that is being introduced in Mexico. It is rarely used (if at all) in domestic transactions.

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