A warranty is a statement of fact about the business. An indemnity is a promise to pay if a specific thing goes wrong. They look similar on the page and behave very differently when a claim arrives, which is why buyers want the second and sellers should give the first.
Warranties: what you say is true
You warrant that the accounts are accurate, the contracts are in the data room and the company has no undisclosed claims. If a warranty is wrong, the buyer must prove the loss it caused.
Indemnities: what you pay regardless
An indemnity for a known tax issue or an ongoing dispute pays out pound for pound, no proof of loss needed. Give them only for risks you have named, with a cap and an end date.
Disclosure is the seller's protection
Anything fairly disclosed against a warranty cannot be claimed for. The disclosure letter is the most valuable document a seller signs. Spend the time on it.
