Vendor protection clauses

Question 1

Key elements of a de maximis clause:

Answer 1

• Set maximum value as purchase price amount

- Set the limit as lower than the purchase price if strong seller

Question 2

Key elements of a de minimis clause

Answer 2

• Amount of any individual claim must be equal to or exceed x
• Amount of claim when aggregated must be equal to or exceed x

Question 3

Default position for a time limit claim:

Answer 3

• 6 years contract claim

- 12 years deed claim

Question 4

Key elements of a time limit clause:

Answer 4

• Time limit of 2-3 years for a non-tax claim (2 audit periods sufficient)
• Time limit for tax claim of 6 years from current accounting period for a tax claim, or 7 years from date of completion.

Question 5

Third party clause:

Answer 5

• Purpose - Make seller aware of any potential claims against it asap
• To allow seller to direct conduct of claims
• Default position - nothing
• Key elements:
  Requirement for notification of the seller by buyer
  Conduct of claim by seller
  Indemnity for the buyer where seller is conducting claim