Share Purchase Dispute Guide

Here is a detailed breakdown of the key differences:

Ideally, a company will have both documents in place: the SPA to handle the sale transaction, and a shareholders’ agreement to regulate the shareholders’ relationships going forward. Each serves a distinct legal and commercial purpose.

However, both sides usually engage legal advisers to negotiate terms, adjust risk allocations, and draft bespoke clauses. This negotiation stage is where many future disputes can either be prevented—or inadvertently seeded.

For example:

• Sellers may push back on warranties that are too broad or unrealistic.
• Buyers may want indemnities for known risks such as tax audits, unpaid debts, or pending claims.
• Both parties should review how earn-out provisions are worded, as these are a common flashpoint in disputes.

At Francis Wilks & Jones, our team has decades of experience drafting and negotiating SPAs. Whether you are buying a company, selling your business, or managing a shareholder exit, we ensure your agreement is clear, fair, and legally secure.

Financial warranty disputes

These occur when the seller gives assurances about the accuracy of the company’s accounts or financial condition. If the buyer later discovers overstated revenues, hidden debts, or inflated asset values, they may claim that the shares were purchased at an unfair price.

Legal or regulatory warranty disputes

SPAs often contain warranties confirming that the company complies with laws and regulations. If, post-sale, it turns out that the business has breached regulatory requirements—such as GDPR, health and safety, or licensing obligations—the buyer may claim that these warranties were false.

Asset ownership and title warranties

Sellers typically warrant that the company owns or has full rights to use all key assets. If ownership is disputed or subject to third-party claims (such as leased equipment, unregistered trademarks, or encumbered property), the buyer may bring a claim, especially if the asset was central to business value.

Employment and HR warranty disputes

Warranties usually confirm that employment contracts are in place, disputes are disclosed, and pension contributions are up to date. If the buyer discovers tribunal claims, TUPE issues, or unpaid liabilities to employees, they may allege breach and seek indemnification.

Tax warranty disputes

The SPA often contains warranties that the company is up to date with all tax payments and compliance obligations. If HMRC initiates an investigation, or backdated tax becomes payable, the buyer may pursue the seller under the tax warranties—even if the issue arose from historic conduct.

Intellectual Property (IP) warranty disputes

Warranties around ownership and use of intellectual property are vital, particularly in technology or creative industries. If a key software licence has expired, or if a product infringes another party’s IP, this can lead to high-value claims with reputational consequences.

Operational warranty disputes

These disputes involve claims that the seller misrepresented the status of key contracts, supplier relationships, or infrastructure. A buyer may discover, for instance, that essential systems are outdated or that a key supplier planned to terminate a contract pre-sale.

Client or revenue stability warranties

Warranties about revenue, trading continuity, or the stability of customer relationships can give rise to disputes—especially where a major client terminates soon after completion. Buyers may argue that the seller failed to disclose pending terminations or adverse trends.

Incomplete or misleading disclosure

Even if a warranty appears to be breached, the seller may rely on disclosures made in the disclosure letter to avoid liability. However, if the buyer alleges that the disclosures were vague, incomplete, or misleading, this can escalate into a dispute of its own.

These disputes often hinge on how carefully the SPA was drafted—and how fully the disclosure letter was prepared. Our team at Francis Wilks & Jones advises both buyers and sellers to ensure warranties are realistic, clearly defined, and properly supported by disclosures to reduce the risk of later litigation.

Misrepresentation claims are often more serious than breach of warranty claims because they can lead to the entire transaction being unwound. These disputes can be complex, particularly when allegations involve dishonesty or when the distinction between representations and warranties is blurred.

There are three main types of misrepresentation under English law:

Fraudulent misrepresentation

This occurs when the seller knowingly or recklessly makes a false statement with the intention of misleading the buyer. For example, a seller might knowingly conceal litigation, overstate revenue, or falsely claim that a major contract has been renewed.

Claims for fraudulent misrepresentation are rare but severe. The buyer can seek rescission (to undo the transaction entirely) and damages, including consequential losses. Courts take a strong stance where there is evidence of intentional deceit.

Negligent misrepresentation (under the Misrepresentation Act 1967)

Negligent misrepresentation arises when the seller makes a false statement believing it to be true, but without having taken reasonable care to verify it. The buyer does not need to prove intent—only that the statement was false and relied upon.

For example, if a seller claims the company has no pending disputes based on informal assurances, but a dispute later surfaces that they failed to properly check, this could amount to negligence.

Buyers in these cases can claim rescission or damages in lieu of rescission, especially if unwinding the deal is impractical.

Innocent misrepresentation

This is when the seller genuinely believes the statement to be true and has reasonable grounds for doing so, but the statement later proves to be false.

While rescission may still be available, damages are not usually awarded unless the buyer can show a legal basis outside of misrepresentation—such as breach of contract.

These cases are less likely to result in aggressive litigation but may still affect the parties’ commercial relationship and trust.

Pre-Contractual representations vs warranties

A key issue in many disputes is whether a statement made before the SPA was signed amounts to a representation or has been “elevated” to a contractual warranty. If the SPA states that no party has relied on pre-contractual representations, this can limit a buyer’s ability to bring a misrepresentation claim.

However, these “entire agreement” clauses must be clearly worded and cannot always exclude fraud or negligent misstatement. Courts often look closely at negotiation records, correspondence, and disclosure documents to assess what was said—and relied upon.

Proving reliance

For any misrepresentation claim to succeed, the buyer must show they relied on the false statement when deciding to enter the SPA. The more casual or informal the statement, the harder this is to prove.

This is why buyers should:

• Keep a clear record of information provided pre-sale
• Ensure key assurances are recorded in the SPA as warranties
• Investigate any vague or uncertain statements during due diligence

Sellers, in turn, should:

• Avoid making sweeping verbal assurances
• Use well-drafted “entire agreement” clauses
• Work closely with legal counsel on disclosures and risk allocation

At Francis Wilks & Jones, we advise clients on both sides of misrepresentation disputes—from defending sellers accused of wrongdoing to helping buyers recover losses caused by false or incomplete information. Early advice is critical, especially when the validity of the entire transaction may be at stake.

Earn-outs are a common way to bridge valuation gaps in share sales. The idea is simple: the seller receives a base payment up front, with additional payments (“earn-outs”) made only if the business hits agreed targets after the sale.

Unfortunately, earn-outs are one of the most common triggers of post-completion disputes. These claims can quickly become contentious, especially if the buyer is now in control of the company and has influence over the performance metrics.

Here are some of the key types of earn-out disputes we see:

Manipulation of financial results

The most frequent dispute involves a buyer allegedly taking steps that reduce the company’s reported profits—either deliberately or as part of their operational style.

Examples include:

• Deferring profitable contracts until after the earn-out period ends
• Charging additional group overheads to the company
• Changing accounting policies or treatment of key costs

Sellers may allege that the buyer acted in bad faith or breached an implied obligation not to frustrate the earn-out.

Ambiguity in earn-out formula

If the SPA does not clearly define how the earn-out is calculated—e.g. EBITDA, turnover, net profit—there is significant room for interpretation. Even subtle differences in accounting treatment can materially impact the amount payable.

Disputes often arise where:

• Definitions of financial terms are missing or vague
• The measurement period is unclear
• There is no mechanism for resolving disagreements over interpretation

Clarity at drafting stage is essential to reduce this risk.

Changes to business operations post-sale

Earn-outs often assume the company will continue operating as it did pre-sale. But if the buyer significantly restructures the business, changes its focus, or merges it into another entity, the earn-out conditions may become unachievable.

This can lead to claims that:

• The buyer breached an express or implied duty of good faith
• There was a failure to act in a commercially reasonable manner
• The buyer intentionally disrupted the earn-out mechanics

Well-drafted SPAs often include operational covenants to mitigate this risk.

Disputes over governance or access to information

Sellers often want to monitor performance during the earn-out period to ensure targets are being fairly assessed. However, once the buyer owns the company, the seller’s visibility may be limited.

If the SPA does not include proper information rights, audit access, or a defined reporting process, disputes can arise over how figures are produced and verified.

Solutions in well-drafted SPAs

To minimise the risk of disputes, parties should:

• Clearly define all financial terms and targets
• Set out specific reporting obligations and audit rights
• Include a dispute resolution mechanism (e.g. expert determination by an accountant)
• Consider including an express duty of good faith or reasonable efforts clause

Where disputes do arise, many SPAs direct parties to binding expert determination, but where there is no such clause—or the dispute extends beyond technical accounting—litigation or arbitration may follow.

At Francis Wilks & Jones, our team regularly advises on both drafting and enforcement of earn-out provisions. We help clients resolve disputes efficiently and ensure that future earn-outs are clear, enforceable, and commercially realistic.

The financial condition of a company is a key factor in valuing its shares. Whether the SPA includes completion accounts, a locked box mechanism, or financial warranties, inaccurate reporting can lead to serious claims post-completion.

Here are the most common types of financial reporting disputes:

Inaccurate or misleading financial statements

A buyer may claim that the company’s financial accounts overstated its assets, understated liabilities, or failed to present a true picture of its financial health.

These claims may relate to:

• Inflated revenue or profit figures
• Hidden or undisclosed liabilities (e.g. unpaid taxes, overdue debts)
• Overvaluation of assets, such as stock, goodwill, or property
• Unrecorded provisions (e.g. for doubtful debts or claims)

Buyers often argue that, had the financial information been accurate, they would have paid less—or not proceeded at all.

Completion accounts disputes

Where the SPA includes completion accounts to adjust the purchase price post-sale, disputes can arise over how those accounts are prepared.

Typical issues include:

• Disagreements on valuation methods (e.g. accruals vs cash basis)
• Timing of income and expenditure recognition
• Inclusion or exclusion of certain transactions or liabilities

Many SPAs include a mechanism for resolving these issues via expert determination, usually by an independent accountant. However, if that process is unclear or missing, disputes can escalate into litigation.

Locked box mechanism issues

In a locked box structure, the purchase price is fixed based on a balance sheet drawn up before the sale. The seller gives warranties that no value will “leak” out of the company between that date and completion.

Disputes may arise if:

• The buyer believes value has been extracted (e.g. through dividends or unusual payments)
• The locked box accounts were not properly prepared
• There was insufficient protection against leakage in the SPA

These disputes often depend on forensic accounting and the precision of drafting.

Breach of financial warranties

If the seller warranted that the accounts were prepared in accordance with accounting standards or gave a “true and fair view,” and that proves untrue, the buyer may claim a breach of warranty rather than a standalone reporting issue.

This can open the door to broader remedies, including damages. These disputes often overlap with breach of warranty or misrepresentation claims and require careful legal and financial analysis.

Inadequate disclosure of financial risk

Sellers may disclose financial risks or assumptions during due diligence or in the disclosure letter. If these are vague, inconsistent with the accounts, or not made at all, a buyer may allege they were misled.

Buyers should ensure:

• Key financial disclosures are in writing and verifiable
• Warranties are not overly qualified or reliant on ambiguous disclosures
• Financial assumptions are scrutinised during due diligence

Sellers, on the other hand, should aim to provide clear, comprehensive disclosure and seek appropriate caps and thresholds on liability.

At Francis Wilks & Jones, we regularly act in disputes involving financial accounts, earn-outs, and post-completion adjustments. Our team combines legal expertise with commercial and accounting insight to ensure your position is protected—whether you are making or defending a claim.

Common types of compliance-related disputes include:

Trading without appropriate licences or approvals

In regulated sectors—such as financial services, education, healthcare, or transport—trading without the correct permissions can lead to immediate intervention by regulators. If the seller warranted that all consents were in place, the buyer may pursue them for breach if this turns out to be false.

For example:

• FCA authorisations not being valid
• Expired or revoked industry licences
• Missing data protection registrations

These issues can halt operations and expose the buyer to fines or reputational harm.

HMRC non-compliance or tax irregularities

A common dispute arises when the company has failed to meet its obligations with HMRC, including PAYE, VAT, or corporation tax filings. If these liabilities are not properly disclosed—or the SPA contains warranties that they are up to date—buyers may bring claims.

Even if the issue was inadvertent, the costs and time to rectify can be substantial. Some SPAs include tax indemnities specifically to cover these risks, but if drafted narrowly, they may not protect the buyer fully.

Data Protection and GDPR breaches

Sellers often warrant that the company complies with data protection laws, including the UK GDPR. If the buyer later discovers that customer or employee data has been mishandled, or that the company failed to implement proper controls, they may face regulatory enforcement or claims from individuals.

These disputes can involve:

• Failure to obtain valid consent for data use
• Inadequate security or retention procedures
• Absence of a data protection officer or impact assessments where required

Where customer trust is vital—e.g. in e-commerce or health data sectors—these failures can be particularly damaging.

Health & Safety or environmental compliance failures

In sectors with physical premises, manufacturing processes, or hazardous activities, buyers may discover post-completion that the company:

• Lacks up-to-date health and safety policies
• Is under investigation by the HSE
• Has breached environmental permits or caused contamination

These problems can lead to enforcement notices, closure of premises, or long-term clean-up obligations.

If the seller gave warranties that there were no breaches or pending investigations, the buyer may claim for breach—or seek damages based on cleanup or remediation costs.

Reducing regulatory risk in SPAs

To minimise disputes, the SPA should include:

• Warranties around licences, registrations, and legal compliance
• Targeted indemnities for known regulatory risks
• Disclosure of any pending audits, notices, or investigations
• Clauses allowing delayed consideration or retention until regulatory clearance is confirmed

At Francis Wilks & Jones, we work closely with our clients to assess compliance risk during the due diligence process, ensure appropriate protections are built into the SPA, and resolve post-sale disputes if things go wrong.

To succeed in a damages claim, the buyer must show:

• That a specific warranty or contract term was breached
• That the breach caused a quantifiable loss
• That the loss was not too remote or speculative

The calculation of damages often involves complex valuation analysis. For example, if the company’s true value was £1.2 million but the buyer paid £1.5 million based on misleading warranties, the buyer may seek £300,000 in damages.

Many SPAs include:

• Caps (e.g. limiting liability to a percentage of the purchase price)
• Thresholds or de minimis amounts
• Time limits for bringing claims (sometimes as short as 12–24 months)

These can significantly affect the availability and scope of a claim.

Rescission is an equitable remedy that unwinds the sale as if it never happened. It’s only available in specific circumstances, typically involving:

• Fraudulent misrepresentation
• Negligent misrepresentation
• A fundamental failure in the formation of the contract

Courts are often reluctant to grant rescission if:

• The company’s assets or structure have materially changed
• Third-party rights have intervened
• It is no longer possible to restore the original position

If full rescission is not available (because the parties have changed their positions), the buyer may instead seek damages in lieu of rescission under the Misrepresentation Act 1967.

Indemnities differ from warranties in several key ways:

• They usually cover known or high-risk issues (e.g. a specific tax exposure)
• They may offer a pound-for-pound recovery, without needing to prove overall reduction in share value
• The buyer may not need to prove reliance or foreseeability of the loss

However, the scope and wording of the indemnity clause is crucial. If the indemnity is vague or limited in duration or amount, the buyer may find it hard to enforce.

We often advise buyers to negotiate targeted indemnities for:

• Unpaid tax liabilities
• Environmental risks
• Ongoing litigation or regulatory investigations
• Contractual disputes involving key suppliers or customers

Specific performance is an equitable remedy and is not awarded automatically. It is most commonly sought in situations where:

• The buyer wants the sale to go ahead (e.g. seller is refusing to complete)
• The asset involved is unique (e.g. a company with strategic IP or market position)
• Monetary compensation would not adequately address the loss

Courts will consider:

• Whether the SPA is sufficiently certain in its terms
• Whether the party seeking performance has acted fairly
• Whether the obligation is capable of enforcement (e.g. delivering share certificates, board resolutions)

This remedy is often used in pre-completion disputes, where one party is trying to walk away from the deal unlawfully.

Declaratory relief is a flexible tool. It allows a party to ask the court to clarify a legal position without necessarily awarding damages or enforcing specific actions.

For example, a buyer may seek a declaration that:

• A warranty has been breached
• A certain clause in the SPA should be interpreted a particular way
• They are not liable for an indemnity the seller is trying to enforce

This remedy can help resolve disputes before they escalate or provide clarity that unlocks a stalled negotiation.

Expert determination is commonly used for disputes involving:

• Completion accounts
• Earn-out calculations
• Working capital adjustments
• Valuation disagreements

Key features include:

• The expert is usually jointly appointed
• Their decision may be binding or non-binding, depending on the clause
• Courts will generally uphold expert decisions if the process was followed correctly

Parties should ensure the SPA:

• Clearly defines the scope of expert input
• Identifies how the expert will be appointed
• Clarifies whether the decision will be final and binding

Where used properly, expert determination can offer a cost-effective and less confrontational route to resolution.

Arbitration may be particularly appropriate in:

• Cross-border share purchases
• High-value disputes requiring confidentiality
• Cases involving commercial sensitivities or complex technical evidence

Key benefits:

• Proceedings are private and confidential
• Parties often choose arbitrators with relevant expertise
• Awards are enforceable internationally under the New York Convention

However, arbitration has limitations:

• Limited rights of appeal
• Arbitrators’ fees can be high
• Timeframes vary widely depending on process complexity

If an SPA includes both arbitration and expert determination clauses, the scope of each should be carefully defined to avoid jurisdictional overlap.

Section 994 allows shareholders to apply to court if:

• The company’s affairs are being conducted in a manner unfairly prejudicial to their interests
• Their interests have been unfairly disregarded during or after a share sale

Common unfair prejudice claims include:

• Exclusion from decision-making
• Dilution of shareholding post-sale
• Misuse of company funds or assets
• Breach of legitimate expectations between shareholders

Remedies under s.994 can include:

• Ordering the purchase of shares at fair value
• Regulation of company affairs
• Injunctions or changes in management conduct

While not strictly a contractual remedy, unfair prejudice petitions are often used where SPA protections are absent or insufficient—particularly where minority shareholders are left vulnerable after a transaction.

A clause may state that senior representatives of each party must meet within a set period (e.g. 14 days) of a dispute being raised to try to resolve the matter.

Benefits of early negotiation include:

• Speed and cost-efficiency
• Preservation of commercial relationships
• Confidentiality and flexibility

Many disputes—especially those involving earn-out calculations or minor warranty issues—can be resolved through open dialogue without invoking more formal remedies.

Even if negotiation fails, these early steps often set the tone for how the rest of the dispute is handled.

Expert determination clauses usually provide:

• How the expert will be appointed (e.g. by agreement, or through a professional body like the ICAEW)
• What specific dispute the expert will resolve
• Whether the expert’s decision is binding or subject to appeal

This process is particularly useful for:

• Disputes over completion accounts
• Application of accounting standards
• Calculation of deferred consideration

Unlike arbitration, expert determination is not a legal process and does not follow formal procedures. It is faster, more targeted, and usually lower in cost.

However, the parties must:

• Clearly define the expert’s scope
• Ensure there is no overlap with arbitration or court jurisdiction
• Accept that appeals are limited unless fraud or manifest error is proven

Mediation is often included as a mandatory step before litigation or arbitration. It may be facilitated by a mediator from a recognised body such as the Centre for Effective Dispute Resolution (CEDR).

Benefits include:

• Confidentiality (useful for reputational concerns)
• Flexibility and control over outcomes
• Potential for creative, commercial solutions

It is particularly suitable for:

• Disputes involving earn-outs, ongoing business relationships, or minority shareholder disagreements

Mediation may not resolve every issue, but it often narrows the scope of the dispute, saving significant time and cost.

Arbitration clauses should specify:

• The arbitration rules (e.g. LCIA, ICC, UNCITRAL)
• The seat and language of the arbitration
• Number and qualifications of arbitrators
• Whether the decision is final and binding

Advantages include:

• Private proceedings and non-public awards
• Choice of arbitrator with relevant expertise
• Enforceability of awards under the New York Convention

However, arbitration can still be time-consuming and costly. It is best suited to:

• High-value commercial disputes
• International parties
• Situations where confidentiality is critical

Court litigation may be appropriate where:

• No dispute resolution clause exists
• Urgent interim relief is needed (e.g. freezing orders, injunctions)
• The dispute involves legal issues outside the scope of expert determination
• A party seeks a legal precedent or declaration of rights

Considerations include:

• Public nature of proceedings
• Potential for appeals
• Longer timelines and higher legal costs

That said, English courts are well-respected for handling complex commercial cases efficiently—especially in the Commercial Court and Chancery Division, where judges have specialist knowledge.

English courts interpret SPAs using standard principles of contract law:

• Words are given their ordinary meaning
• Entire agreement clauses can limit reliance on earlier discussions
• If terms are ambiguous, courts may consider surrounding circumstances

Key points include:

• Most warranties and indemnities must be expressly stated in the SPA
• Courts will not imply protections unless there isclear justification
• Boilerplate clauses like notice requirements and time limits are strictly enforced

As such, the SPA must be drafted carefully. If it lacks clarity or fails to address certain risks, statutory remedies may fill the gap—but only in limited cases.

Section 994 of the Companies Act 2006 is often used in disputes involving:

• Minority shareholders being excluded from management
• Dilution of shareholdings after completion
• Breach of legitimate expectations (e.g. to remain a director or be consulted on decisions)
• Abuse of powers by majority shareholders

The court has broad discretion under s.994. Remedies can include:

• Forcing the purchase of a shareholder’s shares at fair value
• Ordering changes in company management or governance
• Regulating future conduct of company affairs

While s.994 does not replace contractual rights under the SPA, it provides a powerful back-up where a shareholder is treated unfairly and no adequate remedy exists under the contract.

🔗 Read Section 994 of the Companies Act 2006 (legislation.gov.uk)

Under the Misrepresentation Act:

• A party may claim rescission or damages in lieu of rescission
• The burden of proof may shift to the person who made the statement (especially in negligent misrepresentation)
• Entire agreement clauses must be carefully worded to exclude liability—if at all

This Act is often relied upon in share purchase disputes where:

• The SPA omits certain issues
• The seller made verbal or informal claims
• There are doubts about the effectiveness of exclusion clauses

🔗 Read the Misrepresentation Act 1967 (legislation.gov.uk)

Examples include:

• Mistake – where both parties are mistaken about a fundamental fact
• Frustration – if a contract becomes impossible to perform
• Implied terms – inserted by courts for business efficacy or legal necessity (rare in commercial SPAs)

Courts are generally reluctant to rewrite detailed, negotiated commercial agreements. However, these doctrines can provide relief where the SPA is silent, or an unforeseen event makes its terms unworkable.

They may also support claims where:

• The contract is void or voidable
• The parties’ conduct contradicts the written agreement
• A remedy is needed beyond what the SPA offers

The buyer brings a breach of warranty claim under the SPA and seeks to recover the resulting tax, penalties, and interest. The seller argues that the issue was immaterial and could have been discovered during due diligence.

Outcome hinges on:

• How the tax warranties were drafted
• Whether the issue was disclosed
• Time limits and caps under the SPA

If a specific tax indemnity had been included, the claim would likely be stronger and more straightforward to enforce.

The seller had warranted that there were no known risks of resignation. However, internal emails disclosed later show the seller was aware that the employees were unhappy and had recently interviewed elsewhere.

The buyer brings a misrepresentation and breach of warranty claim. The seller denies any obligation to predict staff decisions.

This kind of dispute highlights the importance of:

• Employment warranties
• Proper disclosure of HR issues
• Considering earn-out structures that incentivise key staff retention

The SPA contains a loosely worded earn-out clause but no express duty of good faith or clarity on how targets should be measured.

The seller initiates a claim alleging:

• Bad faith conduct
• Breach of an implied term not to frustrate the earn-out
• Breach of post-completion operational obligations

A properly drafted earn-out clause—with defined metrics, reporting obligations, and dispute resolution—could have avoided this dispute entirely.

The seller had warranted that there were “no material adverse changes” and “no intention by any major customer to terminate their business.”

The buyer seeks damages for breach of warranty and, potentially, rescission based on fraudulent misrepresentation. Internal correspondence later reveals that the client raised concerns during the due diligence period—concerns not shared with the buyer.

This case underscores the importance of:

• Transparency during due diligence
• Including express warranties about client relationships
• Documenting and disclosing all commercial risks

The buyer now faces:

• Cleanup costs
• Regulatory fines
• Reputational damage

The seller argues that they were unaware of the issue and that no specific indemnity was requested during negotiation.

This case raises issues around:

• The scope and drafting of environmental warranties
• Whether the buyer conducted sufficient due diligence
• The enforceability of any limitation clauses in the SPA

Environmental issues are often overlooked in lower mid-market deals but can result in significant long-term liabilities.

The buyer claims breach of warranty and seeks damages, arguing the seller knew or should have known about the dispute. The seller says the threat was not formalised at the time and was not “pending” under the SPA wording.

Key considerations:

• Whether the warranty wording included “threatened” or “likely” claims
• Whether the matter was properly disclosed
• The SPA’s definitions of litigation and materiality

This kind of dispute highlights the importance of thorough litigation disclosure and precise drafting.

The buyer now faces:

• A need to re-engineer software
• Infringement risk
• Potential licence breaches and client claims

They bring a breach of IP warranty claim. The seller argues the use of third-party code was common industry practice and immaterial.

This dispute underscores the need for:

• IP audits pre-sale
• Specific IP warranties
• Disclosure of third-party contributions and licensing terms

The SPA included warranties that all material contracts had been disclosed. The buyer brings a claim arguing this side agreement materially affects the company’s operating cost and security of tenure.

Disputes like this often arise where:

• Lease variations are informally agreed
• Licences to occupy are undocumented
• Warranties about material contracts are narrowly drafted

Buyers should always conduct full property due diligence, even on group-owned or related-party leases.

The SPA included warranties that stock was properly valued and saleable in the ordinary course of business.

The buyer seeks a completion price adjustment and damages. The seller argues the stock was valued using accepted accounting policies.

This scenario demonstrates the importance of:

• Clear definitions for “net asset value” and “stock”
• Including completion account adjustment clauses
• Conducting on-site inventory inspections as part of due diligence

The buyer alleges breach of warranties on financial records, proper accounting, and good faith conduct.

The seller argues the payments were historic, immaterial, or documented internally.

This type of dispute often becomes highly contentious and can involve:

• Breach of warranty
• Fraud or misrepresentation
• Potential clawbacks or indemnity claims

Strong anti-leakage clauses and pre-completion review rights (especially in locked box structures) are vital for prevention.