“While, in assessing the interests involved, the court must consider the circumstances governing the exercise of a right arising from the contract, it may not take into account the circumstances preceding the creation of that right.”

In its judgement of 20 December 2019, the 𝐂𝐨𝐮𝐫𝐭 𝐨𝐟 𝐂𝐚𝐬𝐬𝐚𝐭𝐢𝐨𝐧 ruled that circumstances preceding the creation of a right may not be considered when assessing abuse of rights. As such, even if the buyer knew, prior to entering into the purchase agreement, that certain representations did not correspond to reality, this cannot be taken into account when assessing whether the buyer’s claim for breaches of representations and warranties constitutes an abuse of rights.

👉 Want to learn more about this judgement and other key Belgian M&A cases from 𝐭𝐡𝐞 𝐩𝐚𝐬𝐭 𝟐𝟓 𝐲𝐞𝐚𝐫𝐬? You can find them all here, together with our related annotations.

Want to know more about pro-sandbagging and anti-sandbagging clauses? You can read all about it in our book on Share Purchase Agreements.

📊By the way, did you know that 𝐭𝐡𝐞 𝟓𝐭𝐡 𝐞𝐝𝐢𝐭𝐢𝐨𝐧 𝐨𝐟 𝐭𝐡𝐞 𝐌&𝐀 𝐒𝐮𝐫𝐯𝐞𝐲 (https://lnkd.in/efJUPcN7) shows that nearly all of the examined acquisition agreements contained a contractual procedure governing the notification of claims by the buyer for breaches of the seller’s representations and warranties? We will be organizing a 𝟔𝐭𝐡 𝐞𝐝𝐢𝐭𝐢𝐨𝐧 𝐨𝐟 𝐭𝐡𝐞 𝐌&𝐀 𝐒𝐮𝐫𝐯𝐞𝐲 this year. Leave your contact details on this form to participate and help us find out whether this trend has continued.

Follow along with our corporate and M&A team as we highlight more interesting case law in the coming weeks!

𝐀𝐧𝐲 𝐪𝐮𝐞𝐬𝐭𝐢𝐨𝐧𝐬? Please contact the authors (Bart Bellen | Ine Schockaert | Kristof De Wael | Karlien De Ryck | Maarten Cnudde | Charlotte Van Weehaeghe | Ward De Byser | Marthe Wouters).

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