Non-survival of representations, warranties, and agreements: Overview, definition, and example
What is non-survival of representations, warranties, and agreements?
Non-survival of representations, warranties, and agreements means that certain contractual statements and obligations expire at closing and do not continue to apply after the transaction is completed. When a contract includes a non-survival clause, it limits a party’s ability to bring post-closing claims based on breaches of those representations, warranties, or covenants—unless specifically carved out.
Why is non-survival of representations, warranties, and agreements important?
This concept is important because it defines the scope and duration of liability for each party after a deal closes. If representations and warranties do not survive, the parties cannot sue each other after closing for any related breaches unless the agreement includes exceptions (such as indemnification provisions that survive closing). Buyers often want survival; sellers often want non-survival to limit post-closing risk.
Understanding non-survival of representations, warranties, and agreements through an example
In a stock purchase agreement, the seller represents that the company has no undisclosed liabilities. If the agreement includes a non-survival clause, and the buyer later discovers a hidden liability, they may be unable to bring a claim—because the seller’s representation expired at closing. However, if that representation had been carved out to survive for 12 months, the buyer might have had a remedy.
Example of how a non-survival clause may appear in a contract
Here’s how a non-survival of representations, warranties, and agreements clause may appear in a purchase agreement:
"Except as otherwise expressly provided herein, none of the representations, warranties, covenants, or agreements contained in this Agreement shall survive the Closing, and all rights, claims, and causes of action with respect thereto shall terminate upon the Closing."
Conclusion
Non-survival of representations, warranties, and agreements limits post-closing liability and is often a key negotiating point in M&A and other transactional contracts. It protects sellers from prolonged risk but may reduce recourse for buyers. Whether included or modified, this clause should be clearly understood by both parties to avoid unintended consequences after closing.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.