These terms will include the purchase price, warranties confirming various aspects of the business and the process to be followed in the event that the buyer wants to make a warranty claim against the seller.
In a recent case, the buyer had a period of 18 months from completion in which to make warranty claims against certain sellers. While seeking to deliver the notice on the last day permitted under the share purchase agreement, the courier instructed by the buyer found that one of those sellers no longer lived at the address set out in the agreement and notice could therefore not be given to him. As a result, only six of the seven relevant sellers received notice in the way required by the agreement.
The High Court held that notice had not been validly served and the sellers were therefore able to strike out the buyer's claim for breach of warranty.
This case shows the importance of notice provisions, which can be overlooked in the negotiations as the parties tend to focus on the more commercial provisions of the share purchase agreement such as the purchase price. When negotiating the share purchase agreement, the parties (and their advisors) should pay attention to the notice provisions and check that the notice procedures will work in practice. Any buyer who wishes to make a warranty claim after completion, must make sure that it follows the notice procedure accurately.