A “good deal” is a function of both the terms under which an exchange of contracts takes place and the price paid or received on completion of a sale and purchase agreement. A high price is no good to a seller if a large portion of the proceeds of sale needs subsequently to be handed back to a buyer in order to compensate for breaches of warranty. Similarly, a low price is not particularly advantageous to a buyer if the assets acquired prove to be subject to unexpected defects for which no redress is enforceable against the seller.
The drafting of a Sale & Purchase Agreement seeks to ensure that a buyer receives what was anticipated and that a seller can walk away with confidence that its continuing liabilities are both known and quantifiable. As a compromise between these two extremes, the drafting of warranties and indemnities identifies the risks in a deal and decides upon whom they should fall.
Participants will receive a booklet containing copies of 16 slides and 63 pages of very comprehensive notes. Each slide will cover a number of related topics and the accompanying notes will support the content of the course to be delivered by the trainer.
During the course of the day, participants will undertake one or two exercises (problems) in groups of two or three (depending on the size of the class) which will involve considering what advice should be given to a client in particular circumstances. Participants will discuss the exercise with each other and then with the trainer and will receive a written answer to the problem.
Acting for a buyer, you are responsible for running a completion meeting which is not proceeding smoothly: the seller has produced some late disclosures, the statutory books of the target company have not been written up satisfactorily, an original copy of an important contract has not been produced and the principal selling shareholder’s share certificate has been lost. You resolve these matters and then, despite the fact that the meeting has continued interminably into the night and the banks are now closed, you arrange irrevocably for the fixed and floating charges on the target company’s assets to be released upon completion and satisfy the vendors that the consideration for the sale will be transferred to them on the following day.
At a pre-completion drafting meeting on the previous day, you discuss the draft disclosure letter with the seller’s solicitor with a view to narrowing the wording of most of the general disclosures so that the effect of the warranties that you are seeking on your client’s behalf are not over-diluted.