Wednesday, 4 September 2013


Today's word: BASKETS AND CAPS
Theme for this fortnight: MERGERS & ACQUISITIONS

In negotiating indemnity provisions, the parties sometimes agree that a party need not indemnify the other unless the damages exceed a minimum amount, called a "basket." Sometimes baskets are a "true basket," where a seller is not liable for damages below that amount. Other times, the basket is merely a "threshold" or "tipping basket," in which case once that level of damages has been reached, the buyer can seek indemnity for all of its damages, including for those below the threshold. The parties may agree that certain liabilities (often for the breach of some of the representations and warranties) will not exceed a maximum level, called a "cap."


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