Reassessing the 'Consequences' of Consequential Damage Waivers in Acquisition Agreements

32 Pages Posted: 17 Sep 2015

See all articles by Glenn D. West

Glenn D. West

Weil, Gotshal & Manges LLP; Texas Tech University School of Law; SMU Dedman School of Law

Sara Duran

Sidley Austin LLP

Date Written: May 1, 2008

Abstract

Consequential damage waivers are a frequent part of merger and acquisition agreements involving private company targets. Although these waivers are heavily negotiated, the authors believe that few deal professionals understand the concept of consequential damages and, as a result, the inclusion of such waivers may have an unexpected impact on both buyers and sellers. The authors believe that this Article is the first attempt to define “consequential damages,” as well as some of the other terms used as purported synonyms, in the merger and acquisition context. After tracing the historical derivation of the term and its current use by the courts, this Article considers the impact of such waivers in a hypothetical business acquisition and proposes some specific guidelines for the negotiation of these waivers.

Keywords: consequential danages, incidental damages, indemnification

JEL Classification: K12, K13

Suggested Citation

West, Glenn D. and Duran, Sara, Reassessing the 'Consequences' of Consequential Damage Waivers in Acquisition Agreements (May 1, 2008). 63 Bus. Law. 777 (2008), Available at SSRN: https://ssrn.com/abstract=2660962

Glenn D. West (Contact Author)

Weil, Gotshal & Manges LLP ( email )

767 Fifth Avenue
New York, NY 10153
United States
214-746-7780 (Phone)
214-746-7777 (Fax)

Texas Tech University School of Law ( email )

1802 Hartford
Lubbock, TX 79409
United States

SMU Dedman School of Law ( email )

Dallas, TX
United States

Sara Duran

Sidley Austin LLP ( email )

One First National Plaza
Chicago, IL 60603
United States

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