Disclosure letter
A seller disclosure document recording exceptions and qualifications to the warranties given in the purchase agreement.
The disclosure letter supplements the warranties in the share purchase agreement. In it the seller discloses specific facts that would otherwise breach a warranty. Disclosed matters are deemed known to the buyer and to that extent exclude the seller liability (qualification of the warranties).
A distinction is drawn between general disclosures (such as the content of the company register or the data room) and specific disclosures against individual warranties. The disclosure letter is closely linked to the due diligence and stands in contrast to the indemnity, which precisely establishes seller liability for known risks.
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This explanation gives a general overview of Austrian law and does not replace advice in an individual case. The specific circumstances of your transaction are always decisive.
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Warranties
Independent assurances by the seller about specific characteristics of the company, the breach of which triggers damages or price-adjustment claims.
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Indemnity
A contractual undertaking by the seller to hold the buyer fully harmless against a specifically identified risk.
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Due diligence
The careful examination of the target company before the purchase from a legal, tax, financial and operational perspective.
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Share purchase agreement (SPA)
The central agreement governing the acquisition of a business (share or asset deal), covering the object of sale, purchase price, warranties and completion.
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