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Business Seller Must Reimburse Buyer for Costs Incurred to Fight Pre-Closing Claims

April 30, 2020 Introduction A buyer of the assets of a business is often sued for damages caused by the seller’s operation of the business; a liability that the buyer expressly did not assume in the asset purchase agreement;  a

Posted in indemnification Tagged with: ,

APA’s Indemnification Provision Only Applied to 3rd Party Claims

April 13, 2020 Introduction The seller of a business usually is responsible for accrued vacation and sick pay in an asset deal. However, the buyer sometimes runs the risk of paying this expense if the seller does not. How does

Posted in customer deposits, direct, indemnification, sick time, third party, vacation time Tagged with: , ,

Asset Buyer Can’t Recoup its Stale Fraud-Breach Claims Against Earnout

March 10, 2020 Introduction It is not uncommon for a business buyer to find undisclosed problems in the acquired business after the closing; problems that the seller’s owner most certainly knew about. Nevertheless, the buyer often makes a business decision

Posted in earn out, earn outs, recoupment doctrine, statute of limitations Tagged with: ,

No Seller Indemnification Obligation to Buyer for Recall of Pre-Closing Product

December 19, 2019 Introduction The buyer of a manufacturing company runs the risk of having to repair or replace a product made by the seller before the closing. One risk is the cost of a recall of a product line

Posted in breach of representations and warranties, financial representation and warranty, indemnification, indemnification for pre-closing product loss, MAE rep, No Undisclosed Liabilities, representations and warranties

Buyer’s Indemnification Claim Notice Tolled 1 Year Contractual but Not 3 Year Statutory Limitations Period

December 11, 2019 Introduction The buyer of a privately held business often has a deadline to make an indemnification claim for the breach of a seller representation and warranty. This survival period in an acquisition agreement often expires sometime from

Posted in extension by contract in Delaware, indemnification, Intellectual Property, statute of limitations, survival of covenants, survival of reps and warranties, tolling Tagged with: ,

Buyer to Indemnify Business Seller for 3rd Party Asbestos Claim Punitive Damages

Introduction Liability for asbestos claims is a common risk with manufacturing companies. Sophisticated buyers and sellers of manufacturing businesses are aware of the risk and usually manage it through an allocation between the buyer and the seller in the acquisition

Posted in asbestos claims, indemnification, punitive damages Tagged with: , ,

Business Buyer’s APA Offset Rights Fund Its Environmental Legal Defense Costs

Introduction A buyer of a business likes offset rights. An offset right provision in a M&A purchase agreement gives the buyer the right to offset losses that it suffers that are the seller’s responsibility from post-closing payments that the buyer

Posted in environmental, indemnification, offset or setoff provision Tagged with: , , ,

Tolling of SPA Survival Period Didn’t Extend Delaware’s Statute of Limitations Period

Introduction It is common in M&A agreements to specify survival periods for making indemnification claims; and to toll the survival period while a timely indemnification claim is pending. However, although a survival period under Delaware law can shorten the applicable

Posted in extension by contract in Delaware, indemnification, statute of limitations, survival of reps and warranties, tolling Tagged with: , ,

Products Liability Indemnification Claim Against Former Owner Timely

Introduction A buyer of the stock of a company that makes products wants and often gets the stock seller to promise to pay for any products liability claims that pop up after the closing that relate to products made before

Posted in indemnification, statute of limitations, survival of covenants Tagged with: , , ,

Seller’s indemnification for environmental remediation costs capped by escrow amount and note adjustment provision

Seller was the owner of Target, a business located in Palo Alto, California that specializes in the electroplating of metal components for industrial use. On June 19, 2014, Seller executed a letter of intent to sell all of Seller’s shares

Posted in Buyer beware, environment representations and warranties, environmental remediation, escrow, indemnification, promissory note, purchase price reduction, stock purchase agreement

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