Warranties, Disclosure and Restrictions

A seller is required to give extensive warranties- contractual representations that the company is what you have said it is.

Disclosure

The most important aspect for a seller- other than getting the money for the shares/assets - is to carefully consider the warranties and disclose against them in as much detail as possible.

If something is fairly disclosed a seller cannot be sued for breach of warranty.

There will always be negotiations with a buyer as regards how long a seller should be on the hook for a breach of warranty claim and the limitations that are to apply.

Restrictions

As a seller, be prepared to enter into restrictions which can be extensive in nature and duration to prevent you competing with or damaging the business you have just sold.
 

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