What Net Lawman says about this template:
"This document is for use by a buyer of shares in a private limited company in circumstances where he or she does not require the full protection of detailed warranties.
It is suitable for transactions where the risks to the buyer are lower: such as when the buyer is familiar with the company, or when the seller is trusted.
Use this document for example when:
Whether transfer of control of a company takes place by a transfer of all the shares, or less than all of them, the buyer knows far less than the sellers about the company. So most of the substance of a sale agreement consists in warranties. Of those warranties, those relating to real property - land and buildings - are likely to be most important.
However, sometimes buyers do not need to rely on detailed warranties. This document is drawn for such an occasion.
Examples when this document might be used include when:
shares change hands within the existing body of shareholders and directors, such as on a management buy-in by a director, or on sale by one shareholder
you are buying from a close friend or relative whom you trust absolutely, and you may not think it appropriate to tie that person down to the extent of a massive slate of detailed warranties
the risk of overstatement or understatement of assets or liabilities is low
the company is being sold to another company in the same group in a reorganisation of group structure
A warranty is a promise that something is as it is described, and which, if untrue, can allow the side relying on that information to seek compensation.
Warranties are used primarily because they protect the buyer, who does not have the same information as the seller about the company. However, when the risks are lower: such as when buyer knows the company or trusts the seller, warranties are less useful.
In this agreement we provide warranties as to title, general background, accounts, cash flow, taxation, and assets. You can choose whether you want each to be given or not. Sellers will, obviously, want to limit the warranties given."
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