In the recent case of Idemitsu Kosan Co Ltd v Sumitomo Co Corp,
the buyer in a share purchase agreement alleged that some of the
warranties given by the seller were untrue as at the date of
completion. Despite the statements of fact being designated as
warranties, the buyer claimed that they also amounted to
representations capable of founding an action for
The court granted summary judgment dismissing the buyer's
misrepresentation claim. It held that where a contractual provision
states only that a party is giving a warranty, that party does not,
by concluding the contract, make any statement to the counterparty
that is actionable as a misrepresentation. While, in principle,
language used in the communication of a negotiating position or
draft contract might amount to an actionable
pre-contractual representation, contractual warranties in the SPA
concerning matters of fact did not amount to representations of
Keep an eye on warranty
periods in the SPA - the buyer was unable to pursue a more
straightforward claim for contractual breach of warranty on the
basis that it was time-barred by the terms of the SPA;
Consider a professional
negligence claim if the advisers should have made the
client aware of the relevant time period for breach of warranty
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about your specific circumstances.
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