When negotiating a share purchase agreement ("SPA"), the parties typically spend a lot of time discussing the representations and warranties.
One technique used by sellers to limit the scope of their warranties is the insertion of qualifications such as "to the best of the seller's knowledge ". Indeed, if a warranty is limited by the seller's knowledge, the purchaser bears a heightened burden of proof and can make a claim against the seller only if it can prove that (i) the warranty was inaccurate and (ii) the seller was aware of this fact at the time of signing of the SPA (and/or at closing) and failed to inform the purchaser accordingly.
However, references to the seller's knowledge leave ample room for interpretation, which could lead to disputes between the parties.
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