Reps & Warranties: Compliance with Law; Permits
Category: Continued Diligence & Fact-Finding; Risk Allocation
What is it?
Over a period of time, the company has been and is currently operating within all applicable laws.
When does it matter?
The Seller’s current and past compliance with laws applicable to the Business is obviously a significant issue; the Buyer will not want to purchase a business operating outside the confines of the law or be stuck with liabilities created by the Seller.
What to look out for?
Pay attention to the time period being proposed. From the Seller’s perspective, it’s worth it to try to limit this time period to current compliance, especially if previous violations have already been cured.