--- title: "Warranties and Indemnities in a Business Sale | Astris Law" url: https://www.astrislaw.com/article/warranties-and-indemnities-business-sale-agreement description: "How warranties and indemnities work in a Queensland business sale agreement, how claims arise after completion and the limits sellers and buyers negotiate." lang: en-AU --- Skip to main content ← Back to Articles: https://www.astrislaw.com/articles | Corporate & Commercial →: https://www.astrislaw.com/commercial-lawyers-brisbane Insights 27 October 2026 • 9 min read # Warranties and Indemnities in a Queensland Business Sale: Caps, Claim Periods and Disclosure ## Summary A guide for sellers, buyers and their accountants to the warranties and indemnities schedule of a Queensland business sale agreement. It explains how a warranty differs from an indemnity, how a claim is run after completion, the caps, claim periods and disclosure terms the parties negotiate, where insurance fits and the statutory liability that sits outside the contract. Last reviewed 27 October 2026 · Reviewed by Jamie Nuich (https://www.astrislaw.com/attorney/jamie-nuich), Legal Practitioner Director ## Key Takeaways - A warranty is a statement of fact the buyer must prove untrue; an indemnity pays a defined loss on a defined trigger. - Five warranty groups take most of the negotiating: title and capacity; accounts; tax; material contracts; employees. - Claims run on the agreement's own notice and claim-period clauses, which the Federal Court has enforced. - Sellers negotiate caps, baskets, claim periods, knowledge qualifiers and disclosure; buyers want a full-price cap on title and tax. - No clause removes statutory liability for misleading or deceptive conduct. Image: A hand holding a stylus over the signature box of an agreement on a tablet, illustrating the signing of a business sale agreement and its warranties and indemnities schedule (https://www.astrislaw.com/images/articles/deed-signature.jpg) In This Article 1. 1. What is the difference between a warranty and an indemnity? 2. 2. Which warranties get the most attention in a sale agreement? 3. 3. How does a warranty claim arise after completion? 4. 4. What limits do sellers negotiate, and what does a buyer push back with? 5. 5. Where does warranty and indemnity insurance fit? 6. 6. Can the agreement exclude liability for misleading or deceptive conduct? 7. 7. What only your own deal can settle 8. 8. What happens next 9. 9. Frequently Asked Questions The warranties and indemnities schedule allocates the risk that something is wrong with the business after completion, and so how much of the price in the heads of agreement (https://www.astrislaw.com/article/heads-of-agreement-business-sale) is at stake for the seller. Warranties are statements of fact and indemnities are promises to make good defined losses, with caps, time limits and disclosure around both. None of it removes liability for misleading or deceptive conduct under s 18 (https://classic.austlii.edu.au/au/legis/cth/consol_act/caca2010265/sch2.html) of the Australian Consumer Law (**ACL**) in the _Competition and Consumer Act 2010_ (Cth) (**CCA**). Here is how Astris Law in Brisbane reads one. ## What is the difference between a warranty and an indemnity? A warranty is a statement of fact and an indemnity is a promise to pay. If a warranty is untrue the buyer claims damages for breach of contract, proving that the statement was false, that the falsity caused loss and that the matter was not fairly disclosed; the loss is usually the gap between the price paid and what the business was worth. An indemnity makes good a defined loss when a defined event happens, so a tax indemnity pays the tax without the buyer having to prove a breach of warranty. Courts read indemnities strictly and resolve ambiguity against the party relying on them (_Andar Transport Pty Ltd v Brambles Ltd_ (2004) 217 CLR 424 (https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/HCA/2004/28.html)), so a specific indemnity needs a precise trigger and measure of loss. ## Which warranties get the most attention in a sale agreement? Five groups of warranties take most of the negotiating effort. Title and capacity warranties say that the seller owns what it sells, that it has power to sell it and that the shares or assets are unencumbered; if one fails the buyer may not have acquired what it paid for, so these usually carry the full-price cap and the longest claim period. The accounts warranty says that the last accounts give a true and fair view; the price is usually a multiple of earnings, so this warranty converts most directly into a claim for the difference in price. Tax warranties carry the most weight in a share sale (https://www.astrislaw.com/article/share-sale-vs-asset-sale-australia), because the company's tax history comes with it (https://www.ato.gov.au/businesses-and-organisations/corporate-tax-measures-and-assurance/privately-owned-and-wealthy-groups/tax-governance/tax-governance-guide-for-privately-owned-groups/starting-your-business/acquiring-a-new-business), as the Australian Taxation Office tells buyers. Their claim period is set against the Commissioner of Taxation's power to amend under s 170 (https://classic.austlii.edu.au/au/legis/cth/consol_act/itaa1936240/s170.html) of the _Income Tax Assessment Act 1936_ (Cth): broadly two years after notice of assessment for individuals and for small and medium business entities with straightforward affairs, four years for others and no limit for fraud or evasion. A warranty that expires before that window closes leaves the buyer carrying the gap. The material contracts warranty says that each key contract is on foot, that no counterparty has given notice to terminate or renegotiate and that no major customer has signalled it is leaving; sellers usually try to confine it to written notice actually received. Employee warranties matter for the same reason in a share sale, since accrued leave, unpaid superannuation and award underpayments stay inside the company. An underpayment found in diligence is the usual candidate for a specific indemnity, because once disclosed it is unlikely to support a warranty claim. ## How does a warranty claim arise after completion? A claim starts when the buyer finds something after completion, and from there the agreement fixes what a notice must say, when it must be given and when proceedings must follow. The Federal Court has enforced those terms: in _Optic Security Australia 2 Pty Ltd v YC Investments (NT) Pty Ltd_ [2023] FCA 495 (https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FCA/2023/495.html) a buyer that gave notice well after it first believed it had a claim was held to have notified late, so the contractual bar on proceedings applied. Behind the contractual timetable sits the statutory one: six years for a simple contract under s 10(1)(a) (https://www.austlii.edu.au/au/legis/qld/consol_act/loaa1974226/s10.html) of the _Limitation of Actions Act 1974_ (Qld) and, since 1 August 2025, six years for a deed made on or after that date (https://www.astrislaw.com/article/statute-of-limitations-commercial-disputes-queensland). The parties can agree a different period: in _Price v Spoor_ (2021) 270 CLR 450 (https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/HCA/2021/20.html) the High Court held that the Act confers a benefit a party can bargain away, and the case is generally read as allowing the parties to agree a shorter period too. ## What limits do sellers negotiate, and what does a buyer push back with? Seven protections recur in sale agreement schedules, and each has a usual buyer response. | Protection | For the seller | The buyer's usual answer | | --- | --- | --- | | Cap | Liability limited to a share of the price | Full price for title, capacity and tax | | De minimis and basket | Small claims ignored until together they pass a threshold | A tipping basket that then pays the whole amount | | Claim periods | Warranties expire unless notified by a fixed date | Longer for tax and title | | Knowledge qualifier | Given so far as the seller is aware | Awareness of named people after enquiry | | Disclosure letter | Fairly disclosed matters cannot found a claim | Specific disclosures only | | Conduct of claims | The seller runs third-party claims it pays for | The buyer controls anything touching customers or regulators | | Retention or escrow | Fixes the sum at risk and the release date | Held by a stakeholder, released net of notified claims | Baker McKenzie's Global Private M&A Guide (https://resourcehub.bakermckenzie.com/en/resources/global-private-ma-guide-limited/asia-pacific/australia/topics/agreeing-the-acquisition-agreement/limitations-on-liability) records fundamental warranties almost always capped at the full price in Australian private deals and general warranties usually at 30 to 50 per cent. Other surveys report different figures from different samples, so no published range is a benchmark for your deal. The disclosure letter has to do real work, as _Bridging Capital Holdings Pty Ltd v Self Directed Super Funds Pty Ltd (Trial)_ [2025] FCA 314 (https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FCA/2025/314.html) shows: the Federal Court held that placing documents in a large data room did not qualify a warranty that all material information had been disclosed, because disclosure has to be made in a form and context that lets the buyer grasp its significance. ## Where does warranty and indemnity insurance fit? Warranty and indemnity insurance moves the warranty risk to an insurer so the seller's cap can fall to a nominal figure. Clifford Chance's _What's Market Australia 2025_ (https://cliffordchance.com/content/dam/cliffordchance/briefings/2025/03/whats-market-australia-2025.pdf) puts typical mid-market cover at three years for general warranties and seven for tax and title. Insurers exclude matters within the buyer's actual knowledge (https://hwlebsworth.com.au/warranty-and-indemnity-insurance-covering-risk-in-ma-transactions/) at inception, so a problem found in due diligence (https://www.astrislaw.com/article/buying-a-business-queensland-due-diligence) falls outside a standard policy and usually becomes a specific indemnity backed by a retention. Where there is no policy, a retention is the usual way of securing the seller's exposure. ## Can the agreement exclude liability for misleading or deceptive conduct? No, and the point is worth settling early because sellers often assume otherwise. Section 18 of the ACL applies to a sale of business assets: > A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. Shares are financial products, and s 131A (https://classic.austlii.edu.au/au/legis/cth/consol_act/caca2010265/s131a.html) of the CCA keeps the Commonwealth ACL away from their supply, so a claim about a share sale is usually brought under s 12DA (https://classic.austlii.edu.au/au/legis/cth/consol_act/asica2001529/s12da.html) of the _Australian Securities and Investments Commission Act 2001_ (Cth) (**ASIC Act**) or s 1041H (https://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s1041h.html) of the _Corporations Act 2001_ (Cth), which mirror s 18. None of them can be excluded by agreement. In _Campbell v Backoffice Investments Pty Ltd_ (2009) 238 CLR 304 (https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/HCA/2009/25.html), [130] the joint judgment said that neither an entire agreement clause nor a clause denying reliance on pre-contractual representations will necessarily prevent misleading pre-contractual information from being a contravention. The clauses do narrower work than exclusion: an entire agreement clause confines the contractual claim to the document, and a non-reliance clause is evidence that the buyer relied on nothing outside it, which goes to causation, as French CJ treated it in _Campbell_. ## What only your own deal can settle A schedule is only ever as good as the deal (https://www.astrislaw.com/situation/business-sale-acquisition) around it. Shares or assets, insured or not, how much of the price is deferred and what diligence turned up all change what a sensible cap, claim period or retention looks like, and the same numbers protect one seller and expose another. That assessment has to be made on your agreement and your figures. Jamie Nuich can look at the marked-up schedule with you on (07) 3519 5616 (+61735195616). ## What happens next 1. Read the notice and claim-period clauses the day something is found, and diarise both dates. 2. Give notice in the form the agreement requires, usually within days rather than weeks, and before any instalment or retention is released. 3. Pull the diligence record and the disclosure letter to test whether the matter was disclosed. 4. If part of the price is deferred, check whether the agreement allows set-off and what dispute step it attaches. 5. If nothing is resolved within the agreed period, start proceedings before the contractual and statutory bars fall. ## Frequently Asked Questions ### How long do warranties last after a business is sold? As long as the agreement says. Title and tax warranties usually run longer than general business warranties; on insured deals Clifford Chance's 2025 review puts typical cover at three years for general warranties and seven for tax and title. ### Can a sale agreement exclude liability for misleading or deceptive conduct? No. Section 18 of the ACL applies to an asset sale and the equivalent provisions of the ASIC Act and the Corporations Act apply to a share sale, whatever the contract says; entire agreement and non-reliance clauses go to reliance and causation only. ### Does putting documents in the data room count as disclosure? Not by itself. In _Bridging Capital Holdings Pty Ltd v Self Directed Super Funds Pty Ltd (Trial)_ [2025] FCA 314 (https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FCA/2025/314.html) the Federal Court held that placing documents in a large data room did not qualify a warranty that all material information had been disclosed. Disclosure has to be made in a form and context that lets the buyer grasp its significance, which is the work the disclosure letter does. ## Sources and References - Legislation Australian Consumer Law (Schedule 2 to the Competition and Consumer Act 2010 (Cth)), s 18 (https://classic.austlii.edu.au/au/legis/cth/consol_act/caca2010265/sch2.html) - Legislation Competition and Consumer Act 2010 (Cth), s 131A (https://classic.austlii.edu.au/au/legis/cth/consol_act/caca2010265/s131a.html) - Legislation Australian Securities and Investments Commission Act 2001 (Cth), s 12DA (https://classic.austlii.edu.au/au/legis/cth/consol_act/asica2001529/s12da.html) - Legislation Corporations Act 2001 (Cth), s 1041H (https://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s1041h.html) - Legislation Income Tax Assessment Act 1936 (Cth), s 170 (amendment of assessments) (https://classic.austlii.edu.au/au/legis/cth/consol_act/itaa1936240/s170.html) - Legislation Limitation of Actions Act 1974 (Qld), s 10 (https://www.austlii.edu.au/au/legis/qld/consol_act/loaa1974226/s10.html) - Case law Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25 (https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/HCA/2009/25.html) - Case law Andar Transport Pty Ltd v Brambles Ltd (2004) 217 CLR 424; [2004] HCA 28 (https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/HCA/2004/28.html) - Case law Price v Spoor (2021) 270 CLR 450; [2021] HCA 20 (https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/HCA/2021/20.html) - Case law Bridging Capital Holdings Pty Ltd v Self Directed Super Funds Pty Ltd (Trial) [2025] FCA 314 (https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FCA/2025/314.html) - Case law Optic Security Australia 2 Pty Ltd v YC Investments (NT) Pty Ltd [2023] FCA 495 (https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FCA/2023/495.html) - Regulator Australian Taxation Office, Acquiring a new business (tax governance guide for privately owned groups) (https://www.ato.gov.au/businesses-and-organisations/corporate-tax-measures-and-assurance/privately-owned-and-wealthy-groups/tax-governance/tax-governance-guide-for-privately-owned-groups/starting-your-business/acquiring-a-new-business) - Other Baker McKenzie, Global Private M&A Guide, Australia: Limitations on liability (https://resourcehub.bakermckenzie.com/en/resources/global-private-ma-guide-limited/asia-pacific/australia/topics/agreeing-the-acquisition-agreement/limitations-on-liability) - Other Clifford Chance, What's Market Australia 2025: Warranty and Indemnity Insurance in Australia (March 2025) (https://cliffordchance.com/content/dam/cliffordchance/briefings/2025/03/whats-market-australia-2025.pdf) - Other HWL Ebsworth, Warranty and indemnity insurance: covering risk in M&A transactions (https://hwlebsworth.com.au/warranty-and-indemnity-insurance-covering-risk-in-ma-transactions/) Share Share on LinkedIn (https://www.linkedin.com/sharing/share-offsite/?url=https%3A%2F%2Fwww.astrislaw.com%2Farticle%2Fwarranties-and-indemnities-business-sale-agreement)Share on X (https://twitter.com/intent/tweet?url=https%3A%2F%2Fwww.astrislaw.com%2Farticle%2Fwarranties-and-indemnities-business-sale-agreement&text=Warranties%20and%20Indemnities%20in%20a%20Queensland%20Business%20Sale%3A%20Caps%2C%20Claim%20Periods%20and%20Disclosure)Share on Facebook (https://www.facebook.com/sharer/sharer.php?u=https%3A%2F%2Fwww.astrislaw.com%2Farticle%2Fwarranties-and-indemnities-business-sale-agreement) This article is for general information purposes only and does not constitute legal advice and should not be relied on as such. While we take reasonable care to ensure the accuracy of the information provided, we make no representations or warranties as to its completeness, currency or reliability. We accept no liability for any loss or damage arising directly or indirectly from the use of, or reliance on, this website's content. You should always seek professional advice tailored to your specific circumstances before acting on any information in this article. Liability limited by a scheme approved under Professional Standards Legislation. Astris Law is not a registered tax agent and does not provide tax advice. References to tax law in this article describe the legal framework only. For tax advice specific to your circumstances, consult your registered tax agent or accountant. Related Practice Area Corporate & Commercial https://www.astrislaw.com/commercial-lawyers-brisbane ## The warranties schedule has come back marked up Which cap, claim period and disclosure terms suit you depends on the deal, the price and what diligence found. Jamie Nuich reads schedules with sellers and buyers at the negotiation stage. Call (07) 3519 5616. (07) 3519 5616: +61735195616 Send an enquiry: https://www.astrislaw.com/contact ## Related Articles Insights ### 50/50 Shareholder Deadlock: Exit Clauses and What a Court Can Do Without Them Read more https://www.astrislaw.com/article/shareholder-deadlock-50-50-company-exit-options Insights ### Earn-Outs and Deferred Payments in a Queensland Business Sale: Measure, Security and Disputes Read more https://www.astrislaw.com/article/earn-outs-deferred-consideration-business-sale Insights ### How long and how wide can a restraint on a Queensland business seller run? 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Title and tax warranties usually run longer than general business warranties; on insured deals Clifford Chance's 2025 review puts typical cover at three years for general warranties and seven for tax and title." } }, { "@type": "Question", "@id": "https://www.astrislaw.com/article/warranties-and-indemnities-business-sale-agreement#faq-2", "name": "Can a sale agreement exclude liability for misleading or deceptive conduct?", "acceptedAnswer": { "@type": "Answer", "text": "No. Section 18 of the ACL applies to an asset sale and the equivalent provisions of the ASIC Act and the Corporations Act apply to a share sale, whatever the contract says; entire agreement and non-reliance clauses go to reliance and causation only." } }, { "@type": "Question", "@id": "https://www.astrislaw.com/article/warranties-and-indemnities-business-sale-agreement#faq-3", "name": "Does putting documents in the data room count as disclosure?", "acceptedAnswer": { "@type": "Answer", "text": "Not by itself. In Bridging Capital Holdings Pty Ltd v Self Directed Super Funds Pty Ltd (Trial) [2025] FCA 314 the Federal Court held that placing documents in a large data room did not qualify a warranty that all material information had been disclosed. Disclosure has to be made in a form and context that lets the buyer grasp its significance, which is the work the disclosure letter does." } } ] } ] } ] ```