Representations and warranties (R&W) are the seller's contractual statements in an M&A SPA affirming the accuracy of specific facts about the target company — financial condition, litigation, regulatory compliance, contracts, intellectual property and tax position. Their breach entitles the buyer to indemnification. They are governed by a framework of: basket (minimum claim threshold), cap (maximum aggregate liability), survival period and disclosure letter carve-outs. R&W insurance is increasingly used to transfer warranty exposure from seller to insurer, facilitating cleaner exits. In France, R&W are codified as a specific warranty mechanism (garantie d'actif et de passif); in Switzerland, they operate under general contract law.

‍

Example: in a CHF 20.0 million Swiss acquisition, the R&W package includes: basket CHF 100,000 (0.5%), general cap 25% (CHF 5.0 million), tax warranty cap at 100% price, 2-year general survival (5-year tax). A CHF 350,000 environmental liability emerges post-closing: the buyer's net recovery = CHF 350,000 - CHF 100,000 (basket) = CHF 250,000, within the cap and well-documented in the warranty claim.

‍

Hectelion advises on R&W scope, basket, cap and survival calibration in every M&A transaction, providing clients with optimised protection across French and Swiss law.