For example, the seller can guarantee that he is not aware of ongoing or ongoing litigation against the company sold. This would be an important guarantee for a buyer. 2. The seller has the necessary power and authority to take and perform his obligations under the share purchase agreement. This guarantee confirms that no recipient or administrator has been designated for the target entity. A beneficiary of the administration is authorized to take over the retention of the assets, manage the business and divest his assets in the event of bankruptcy. A guarantee is a contractual clause whose violation gives the innocent the right to claim damages, but not to consider the contract as rejected. A guarantee may therefore, with a condition that authorizes the innocent party to consider the contract as rejected, and an “intermediate” (or “innominate”) term which may give the innocent party the right to consider the contract as rejected, depending on the nature and consequences of the infringement.2 A key document in transactional practice is the share purchase contract (SPA). This document contains provisions that govern, among other things, the terms of the transaction, the payment of the price and the financial accounts between the parties, their obligations and responsibilities. This is the main document negotiated between the parties to cover tax issues. In recent years, particularly for transactions with certain countries, PSPs will be accompanied by taxes. A tax deed is a separate document dealing with the tax issues agreed between the buyer and the seller.
From the buyer`s point of view, the purpose of both documents is to predict the situation of the purchase of the business and, subsequently, it appears that his tax treatment prior to the transactions was wrong. In this case, the company may be held responsible for underpaid taxes, interest (which can be high, especially when a tax audit reveals tax errors made a few years earlier), or even additional penalties. As a general rule, if the guarantees were true, the market value of the business will be based on the price paid by the applicant for the business. However, the defendant can reduce the situation by proving that the applicant made a bad deal and that the actual value of the contract is less than the price paid. On the other hand, the applicant can demonstrate that he has made a good deal and that the market value is greater than the price paid.4 It is important that at the time of the share purchase agreement, the target company is not involved in a dispute or participates in an out-of-court settlement of disputes such as mediation. It was found that the accounts provided only until August 2013 for receivables and not for accounts received until the agreed date of February 2014. The Court found that this significant undersur supply in the accounts makes the sellers in violation of the warranty. In order to ensure that the guarantees provided by the seller to the buyer are not based on subjective factors, i.e.: