Warranties
Independent assurances by the seller about specific characteristics of the company, the breach of which triggers damages or price-adjustment claims.
Warranties are independent, fault-independent assurances by the seller in the share purchase agreement about the existence and characteristics of the object of sale, for example regarding shares, accounts, contracts, taxes or litigation. In practice they replace the default statutory warranty rules (sections 922 et seq. ABGB), which are regularly contracted out.
The consequences of a warranty breach (damages, price reduction) are governed by the contract, together with liability limits such as de minimis, basket, cap and time bars. Known risks are disclosed via the disclosure letter, while specifically allocated risks are covered by an indemnity.
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Legal basis
Statutory texts for orientation; the version in force at the relevant time prevails.
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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Indemnity
A contractual undertaking by the seller to hold the buyer fully harmless against a specifically identified risk.
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Disclosure letter
A seller disclosure document recording exceptions and qualifications to the warranties given in the purchase agreement.
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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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