How do warranty and indemnity claims work in Dutch M&A?

Dutch term: Garantie- en vrijwaringsclaims (M&A) | Legal basis: Freedom of contract + 6:74 BW

Warranty and indemnity claims in Dutch M&A arise when representations or warranties in the share purchase agreement (SPA) prove to be incorrect. Under Dutch law, a breach of warranty is treated as a breach of contract under article 6:74 BW, entitling the buyer to damages. The SPA typically contains detailed rules on the claims process: notification periods, de minimis thresholds, baskets, caps on liability, time limits and dispute resolution.

The buyer's knowledge is a key factor. Under Dutch law, the seller's duty to disclose (mededelingsplicht) and the buyer's duty to investigate (onderzoeksplicht) interact: if the buyer knew or should have known of the issue through due diligence, the warranty claim may be limited or excluded. Disclosure letters listing known exceptions to the warranties are standard practice. The trend towards W&I insurance has shifted the dynamics: buyers increasingly claim against the insurer rather than the seller.

Why it matters for international businesses

For international buyers and sellers of Dutch companies, the warranty and indemnity framework in the SPA is the primary commercial protection mechanism for post-closing risks. Getting the notification procedures, knowledge qualifiers and limitation periods right is essential.