M&A: Violation of a Warranty for Financial Statements

Higher Regional Court Frankfurt am Main, judgement of 7 May 2015, 26 U 35/12.[spacing size=”20px”]

Summaries[spacing size=”20px”]

1. A so called hard balance warranty in the share purchase agreement on the acquisition of a majority of shares in a GmbH which guarantees that the financial statements show the real financial condition and results of operations contains no limiting element of subjectivity.[spacing size=”20px”]

2. According to this warranty, the purchaser shall be treated as if he had known the actual unfavorable results of operations and may negotiate a lower purchase price. A claim for damages for non-performance in the sense that the balance sheet is to be filled up, is not possible.