Case Situation - Company A wishes to purchase Company B ("the Target"). Company A is asking for a warranty to be given about possible litigation against B. The value of the transaction is in excess on $US1 billion.
Read the following draft warranty provisions - which do you think are best for the seller and those best for the buyer.
What is the impact of the risk taken on by the seller and the buyer in each version?
For each version list any possible problems.
Wich do you think is the best?
Version 1 No Litigation. No litigation is pending or threatened against the Target.
Version 2 No Litigation. Except as stated in Schedule X of the Disclosure Letter, no litigation is pending or threatened against the Target.
Version 3 No Litigation. Except as stated in Schedule X of the Disclosure Letter, no litigation is pending or, to the Seller's knowledge, threatened against the Target.
Version 4 No Litigation. Except as stated in Schedule X of the Disclosure Letter, no litigation is pending or, to the knowledge of any of the Seller's officers, threatened against the Target.