When you buy a business, the sale agreement includes promises from the seller that protect you if things aren't as described. The main ones are warranties, indemnities and the disclosure letter.
Warranties
Statements by the seller about the business: for example, that the accounts are accurate, there are no undisclosed disputes, and its taxes are up to date. If a warranty turns out to be untrue, you may be able to claim damages.
Indemnities
A promise to cover a specific, known risk pound for pound, such as an ongoing tax enquiry or a dispute found in due diligence.
The disclosure letter
The seller's list of exceptions to the warranties. Anything fairly disclosed in it usually can't be the basis of a warranty claim later, so read it closely.
Why lenders care
Your protection under the sale agreement is part of what keeps the business, and the loan, safe. Lenders often review the main terms. See What due diligence will a lender expect when I buy a business?.
Most important in share purchases
When you buy the company, you take on its history, so warranties and indemnities matter more than in an asset purchase. See Share purchase vs asset purchase: what's the difference?.
Get advice
These are detailed legal terms. Your solicitor should negotiate them for you.
Last reviewed: 8 October 2026