Buying and selling a business: Seller protection

Buyers can reduce their exposure to risk by using warranties. If you’re selling, you should attempt to limit your liability.

The most common ways of achieving this is by either amending the wording/deleting the warranties, or by including express seller protection provisions within the agreement such as:

• time limits on claims;
• a maximum financial limit on claims;
• an aggregate level of claims; and
• a de minimis limit (a threshold below which claims will be disregarded) in respect of individual claims.

• to carry on the business in the ordinary course and to maximise profits;
• no attempt to reduce or distort the amount of earn-out;
• not to divert business; and
• not to manipulate profits.