Allocation of risk in acquistion

What does the buyer inherit in a share acquisition under English law?

• All liabilities of the target company

• No liabilities

• Only known liabilities

• Only financial liabilities

In an assets acquisition, does the buyer automatically assume all the liabilities of the business?

• True

• False

What are some of the safeguards that a buyer wishes to incorporate into the sales and purchase agreement?

• Warranties and indemnities

• Purchase price adjustments

• Confidentiality clauses

• All of the above

Explain the role of warranties in acquisition agreements in common law jurisdictions.

• Warranties provide a guarantee of certain facts or conditions in acquisition agreements.

• Warranties are irrelevant in acquisition agreements.

• Warranties are only used in civil law jurisdictions.

• Warranties are used to transfer ownership in acquisition agreements.

What are the potential consequences if the warranties in an acquisition agreement prove to be untrue?

• The acquisition may be voided.

• The buyer may seek indemnification.

• The seller may face legal action.

• All of the above.

Explain the concept of loss which flows naturally from the breach according to English case law.

• Loss that is a direct consequence of the breach

• Loss that is unforeseeable

• Loss that is unrelated to the breach

• Loss that is speculative

The aim of contractual damages is to:

• Compensate the injured party for losses incurred.

• Punish the breaching party.

• Reward the non-breaching party.

• Void the contract.

If any statement made by or on behalf of the seller proves to be untrue, what may the buyer have a claim for under common law?

• Misrepresentation

• Breach of contract

• Fraud

• Negligence

What remedies are available if a buyer relies on a misrepresentation of a past or existing fact that turns out to be untrue?

• Rescission or damages

• Compensation only

• No remedy

• Legal action only

Fill in the blank: Rescission is a remedy aimed at putting the parties back into the _______ position.

• pre-contract.

• post-contract.

• negotiation.

• litigation.