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PLAYBOOK TEMPLATES

Memorandum of Understanding (MOU)

An MOU establishes the foundational understanding between parties prior to definitive agreements. This playbook reviews negotiation of commitments, timelines, and governance structures.

Representations & Warranties

Why This Matters: Overbroad or indefinite representations can lead to extensive post-closing liability. Tailored warranties align risk with each party's actual knowledge and reduce potential disputes.

Negotiation strategy

If you're the Party A:

Ensure representations are specific to the Seller's business operations and legal compliance. Add materiality qualifiers where necessary to limit exposure.

If you're the Party B:

Negotiate to limit the scope and duration of representations. Ensure they reflect actual knowledge and operations to avoid undue liability.

Essential elements

1

Organizational Status

Duly organized and validly existing.
2

Authority

Power to enter and perform obligations.
3

Compliance

Adherence to applicable laws.

Action framework

ACCEPT

Propose edits when representations are too broad or lack materiality qualifiers.

EDIT

Reject clauses that impose unreasonable liability or lack clarity.

ADD

Add language to address specific compliance or operational risks.

PRO TIP

Always align representations with the actual knowledge and operations of the parties to minimize risk.

Example clauses

FAVORABLE

Preferred Representation Duration

"The representations and warranties shall survive for a period of [insert duration] and are subject to a basket threshold of [insert amount]."
NEUTRAL

Fallback Representation Duration

"The representations and warranties shall survive for a period of [insert duration] without a basket threshold."
UNFAVORABLE

Overbroad Representations

"The representations and warranties cover all aspects of the business without limitation."

Fallbacks

High-Risk Projects

In high-risk projects, representations should be more detailed and include specific risk mitigation measures to protect both parties.

Cross-Border Transactions

For cross-border deals, ensure compliance representations reflect the regulatory requirements of all involved jurisdictions.

Start-Up Acquisitions

In start-up acquisitions, focus on representations related to intellectual property and financial stability.
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