For a detailed example of an entity purchase agreement, see The main benefit of compensation over other forms of recovery is that you can avoid problems with loss. The claimant may recover all the damage he has suffered as a result of a violation of the compensation in question. [ii] There are technical differences between a defence obligation, on the one hand, and the indemnification obligation, on the other, but we use the reference to compensation or indemnification, as it includes both concepts in this article. A contract for the sale of assets usually includes guarantees and compensation provided by a seller for the benefit of a buyer. When shares or operating assets are sold, there is no automatic protection for the buyer up to the size, nature, quality, etc. of the things he will acquire. The only protective measures available to a buyer are those contained in the sales contract. In addition to insurance and warranties, M&A sales contracts generally contain disclaimers under which one party (“indemnitee”) agrees to defend, indemnify the other party or party (“party to indemnify”) from certain claims or damages. [ii] These are, as a general rule, claims resulting from a breach of the insurances and guarantees set out in the contract of sale or the insurance of the person subject to compensation or other specific matters. Information on the development of a similar agreement for the acquisition of all outstanding shares of a private company is available at: • Negotiate compensation instead of collateral for a particular problem; “When the product became available about 10 years ago, buyers mostly purchased R&W [insurance] as additional indemnification coverage if they weren`t able to incentivize sellers to provide adequate indemnification protection under the settlement agreement. .