Beware Damage Waiver Provisions In M&A Agreements

Law360, New York (July 13, 2012, 3:06 PM EDT) -- Acquisition agreements often contain provisions that restrict or prohibit the payment of "consequential," "special," or "incidental" damages for breach.[1]

Principals and their counsel may intend that these provisions prevent liability arising from unknown and unforeseeable future events; however, because these terms are poorly understood in the context of acquisition agreements, the exclusion of these categories of damages may have unexpected consequences for the parties to a transaction.

Buyers and sellers should carefully weigh the effect of these damage-limiting provisions and consider alternative, more clearly defined provisions...
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