법무법인(유한) 율촌 | Yulchon LLC

Successfully dismissing most of the claims on behalf of the transferor, Yulchon defended against a lawsuit where the transferee alleged damages due to the perceived breach of representations and warranties (“R&W”) provisions outlined in the share purchase agreement (“SPA”).

The plaintiff, having assumed control and acquired the total number of shares issued by the target company from the defendant, initiated the suit when certain bonds held by the target company were anticipated to become impossible to be paid, claiming damages based on the alleged violation of the transferor's R&W provisions.

Representing the defendant, Yulchon argued that liability should be determined in accordance with the jurisprudence governing the interpretation of the SPA. Given the significant impact of R&W provisions on the legal relationship between parties, Yulchon sophisticatedly argued that the lack of sufficient allowance for accounts should not be evaluated in the same manner as the occurrence of external liabilities from an accounting perspective. The court wholly accepted Yulchon's argument, rejecting most of the plaintiff's allegations regarding the breach of the R&W provisions by the defendant.

This case is notable for providing a clear standard for the interpretation of contracts concerning the breach of R&W provisions, which has recently become a major issue in the SPA process, and for successfully defending the transferor's liability for damages.