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An asset or share purchase agreement will typically include warranties and indemnities given by a seller in favour of a buyer.

A warranty is a statement by the seller that a particular fact is true. For example, a seller may warrant that all of the properties have good and marketable title.

Property warranties in a share or asset purchase agreement will sit alongside warranties on other areas such as employment and tax or, alternatively, be contained in a separate property schedule appended to the agreement, see Practice Notes: Warranties and indemnities—asset purchase and Warranties and indemnities—share purchase.

An indemnity is a contractual obligation on the seller to reimburse the buyer in respect of a designated liability, which may arise in the future.

This Practice Note provides a summary of the need for property warranties and indemnities in asset and share purchase transactions, their characteristics, the practical considerations when acting for a buyer or seller and some examples of property warranties.