Sellers’ Warranties
In the warranty section of a share purchase agreement (SPA), the sellers are required to provide warranties regarding essential circumstances in the company and its operations. The warranties are generally made on the date when the seller and buyer sign the SPA.
Signing and closing
If the closing of the transaction (the point in time when the shares change owners) takes place at a later date than the signing date, it is often a hot topic to agree whether the warranties are made on the date of signing only or at signing and also at closing. Notably, in case there is an extended period between signing and closing, it is reasonable to require the seller to renew its warranties at closing.
It should be noted, however, that sellers never should agree to provide forward-looking warranties, i.e., not give warranties relating to events that may happen in the future. Further, sellers’ warranties should be made by each seller individually and severally, and not jointly and severally.
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