Exclusion of Consequential Damages

Bloomberg Law

In merger and acquisition (‘‘M&A’’) transactions, the definitive purchase agreement (whether asset purchase agreement, stock purchase agreement, or merger agreement) typically contains representations and warranties, and related indemnification covenants, provided by the parties.1 Buyers and sellers often negotiate the scope and types of damages covered by the indemnification obligations, including whether consequential damages suffered by the buyer as a result of the seller’s breach under the purchase agreement should be included in—or excluded from—the seller’s indemnification obligations