In the context of the sale of shares or business assets, normally a seller negotiates contractual limitations on its liability particularly those arising out of warranties. The practical approach adopted in order to limit liabilities may take the form of imposing preconditions to claims, setting out time limits on claims or agreeing defined remedies.  

In a recent judgment published on 3 May 2016, Teoco UK Ltd v Aircom Jersey 4 Ltd [2015] EWHC (Ch), the High Court decided that a buyer was barred from pursuing a claim under the warranties for failing to give the seller written notice of a claim setting out reasonable details of the claim (including the grounds on which it was based and the buyer's good faith estimate of the amount) within the time frame as required by the relevant clause of the sale and purchase agreement.

Although narrowly construed, the provisions purporting to limit the seller’s liability in respect of warranties claims must be carefully considered and taken into account. This applies not only during negotiations and drafting of SPAs, but also, by buyers in the event of breach occurring after completion of the agreement.