Basket and de minimis (warranty thresholds)

The basket and the de minimis clause are two thresholds that frame the triggering of an Asset and liability warranty in a sale agreement. The de minimis clause sets a floor amount below which an individual loss is not taken into account: it screens out small claims. The basket is an overall triggering threshold: as long as the cumulative eligible losses do not reach that level, no indemnification is due.

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Once the basket is exceeded, two logics coexist. In a deductible basket, only the excess above the threshold is indemnified, like an insurance deductible. In a tipping basket, crossing the threshold opens indemnification from the first unit, including the part below the threshold. The choice between these variants is an important negotiation stake for seller and buyer alike.

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For example, the warranty provides a de minimis of 15,000 CHF per claim and a basket of 150,000 CHF. An isolated loss of 10,000 CHF is screened out; once cumulative eligible losses exceed 150,000 CHF, indemnification kicks in under the variant retained, deductible or first unit.

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These thresholds combine with the Liability cap (warranty cap), which limits the maximum indemnification. Together, they delimit the seller's real exposure under its Representations and warranties, a balance finely calibrated during financial due diligence and the drafting of the contract.