Navigating warranty claims after buying or selling a business

Stuart Farr, partner in Harrison Drury’s commercial dispute resolution and avoidance team, explains warranty claims and how they can be pursued to remedy issues arising from corporate transactions.

The dust has now begun to settle on many corporate deals across the UK which were concluded in the “frenzy” before the tax deadline in late March 2025.

As commercial life for those involved returns to the day-to day routines and away from the transactional excitements, there will inevitably be some businesses who, driven by the fiscal and economic conditions, are now wondering whether they bought or sold in haste and being left, so to speak, to repenting at leisure.

Checking warranty clauses

No commercial deal, no matter how meticulous it is organised and prepared, can cater for absolutely everything. There is always an element of risk. The unforeseen and the unforeseeable. The proverbial unturned stone or that horrid something which crawls out of the commercial woodwork when you least expect.

So, what do you do when you discover the deal you struck isn’t quite what it was expected to be – whether for one or both parties to the deal?

In most cases, the first task is – or should be – to dig out the legal contract and see whether there is anything which will eradicate the pesky critter which, despite all that due diligence, had remained hidden away in the crevices of the business.

The warranty clauses are usually a first port of call and sometimes they can supply that much needed dose of “peskycide” to help eradicate the problem.

Pursuing a warranty claim – Four things to consider

Whether you are on the giving or receiving end of a warranty claim, there are always some basic considerations to bear in mind.

Firstly, the warranty claim must be advanced within time. Warranties are often time limited – to a period much shorter than the normal statutory limitation periods – and so it is important to check whether time has expired. If the claim is out of time, the ability to advance a warranty claim may become severely impaired. Other options may need to be considered.

Secondly, check whether the warranty claim complies with the contract in terms of its content and substance. Advancing only the bare essentials of a claim may not be enough. The contract may require full explanations of the issue, supporting documents and, importantly, a precise quantification of the consequences.

Thirdly, is there a deferred or retained consideration involved? If so, what entitlement is there to withhold payment while the warranty issue is resolved? And, for how long? Does interest accrue in the meantime?

Fourthly, does the contract contain a specific dispute resolution mechanism? If so, check what that entails because it may have a direct impact on the method by which the warranty issues can be addressed between the parties. The ability of either party to run off to court is often purposely curtailed to facilitate commercial discussions.

What to do next

Navigating warranty claims in either direction can be tricky. They require timely action, thorough preparation and strategic know-how. Whether or not the matter can be resolved swiftly, or justifies a more formal resolution, will often depend on these factors being observed.

Regardless of which side of a warranty claim you’re on, at Harrison Drury, we have the expertise to assist, with a successful track record to match.

To speak with Stuart, or another member of our commercial dispute resolution team about a potential warranty claim, or other commercial dispute resolution matter, call us on 01539 312497.