Survival period
The survival period is the window after closing during which a buyer may still bring a claim for breach of a representation or warranty. Once it expires, the representation stops providing any protection, however serious the breach turns out to be.
Survival periods are tiered rather than uniform. General business representations commonly survive for a defined period measured in months or a small number of years; fundamental matters such as title to the shares or assets, and tax, typically survive considerably longer, sometimes tracking the relevant limitation or reassessment period.
Why the tiering makes sense
Most operational problems surface within a business cycle or two — a customer leaves, equipment fails, a contract turns out to be unassignable. Tax reassessments and title defects surface on their own timetable, often years later, so a uniform short period would leave a buyer exposed on exactly the risks they can least manage.
Sources
This definition is checked against primary sources. Links were last confirmed on the dates shown.
- 01Canada Revenue AgencyGovernmentSelling a business
- 02Treadstone LawLegal commentaryHow Long Do Representations and Warranties Survive After an Ontario Business Sale?
- 03Treadstone LawLegal commentaryIndemnity Baskets and Caps in an Ontario Business Sale
- 04Treadstone LawLegal commentaryEscrow and Holdbacks in an Ontario Business Sale
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