Basket and de minimis

Without these thresholds, a buyer could in theory bring a claim over a few hundred dollars of unrecorded inventory, and a seller would have to respond to it the same as a genuinely significant breach. A de minimis and a basket exist to keep the indemnity process focused on problems that actually matter to a deal of that size.

How the two work together

• De minimis: an individual claim below the threshold does not count toward anything, full stop
• Basket: qualifying claims (the ones that clear de minimis) accumulate until the basket total is reached
• Only once the basket is reached does the indemnifying party owe anything on those claims

The mistake people actually make

Confusing a "tipping" basket with a true deductible. With a tipping basket, once the cumulative total crosses the basket, the indemnifying party owes the full amount from dollar one. With a true deductible, only the amount above the basket is ever recoverable. These two structures can produce very different payouts on the same set of claims, and it is common for a party to believe they negotiated one when the drafting actually gives them the other.