Another lawyer asked me when a seller should provide disclosure to qualify the representations and warranties given by the seller in a sale and purchase agreement (SPA) for an M&A transaction.

I thought I’d share my response here.

The seller typically provides a disclosure letter to qualify the representations and warranties made, which is delivered to the purchaser before the execution of the SPA. The contents of the disclosure letter are subject to the purchaser’s acceptance, and a draft of the disclosure letter is generally provided to the purchaser prior to the SPA’s execution.

The SPA may impose obligations on the seller to notify the purchaser of any facts or circumstances that may cause the representations and warranties to be materially untrue after the execution of the SPA and before its completion. A risk-averse purchaser may require the seller to notify the purchaser of all facts or circumstances (whether material or not) that render the seller’s representations and warranties untrue during this interim period. Any representations and warranties that become untrue during this period may constitute a breach, giving the purchaser the right to terminate the agreement.

The seller’s representations and warranties will be repeated at completion of the SPA. The idea is that the representations and warranties should be true at the signing of the SPA and should continue to be true at completion.

This post was first posted on LinkedIn on 13 March 2025.