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selling a company? know that it's about to lose a source of revenue?

28 April 2011

Do you need to tell the (potential) buyer about the future threat to the business? If you want to avoid a claim for misrepresentation you do… or risk unlimited liability.

A case on 20th April this year has confirmed the position at English law that silence (when you know an honest statement is no longer true) can amount to fraudulent misrepresentation.

It’s not the first such case to make this point (as anyone who attends our regular in house lawyers forums will be aware) but it does place the bar higher for sellers of businesses, who must balance the threat to the sale against the (very real) threat of a claim, in respect of which they will not be able to limit liability.

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