In addition to reducing guarantees to a later date, there is also the concept of guarantees that “survive the conclusion of a transaction.” The survival of the guarantees relates to the right of the purchaser to assert rights in the context of these guarantees. Normally, the seller limits this right by requiring that all claims related to a defective warranty must be filed (or disclosed) within a specified period of time. In this case, the different types of guarantees should be distinguished. As a result, short periods of time would apply to asset management and tangible assets, while real estate and pollution guarantees would likely be subject to longer periods of time. Tax guarantees are often subject to the legal period during which tax authorities can continue to collect taxes related to the period before the transaction closes. The reduction in guarantees is generally necessary in periods when a major event occurs as part of an agreement. For example, a share purchase agreement can only provide for the completion of the transfer after obtaining the necessary authorizations; the buyer will require the seller to lower his warranties at the close. This decrease further encourages the seller to ensure that the quality of the divested transaction remains as it was at the time of signing, leaving a deterioration of the risk and the seller`s account. One of the simplest formulations of the “bring-down” clause, which is used as the basis in the American Bar Association`s Model Merger Agreement, requires that representations and guarantees of the objective “on all essential points” be correct on the reference date (this formulation of the reduction clause is here called the AMR standard). Although the interpretation of intangible inaccuracies contained in the AMR standard prevents the purchaser from closing the transaction due to a trivial violation of the target`s representations, this wording does not completely exclude the buyer`s ability to leave the transaction due to a general immaterial change in the target`s operation.
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