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What is level of materiality?

To establish a level of materiality, auditors rely on rules of thumb and professional judgment. They also consider the amount and type of misstatement. The materiality threshold is typically stated as a general percentage of a specific financial statement line item.

What is sandbagging in M&A?

The term “sandbagging” is commonly used in merger and acquisition transactions to refer to a practice employed by buyers to claim a breach of a representation or warranty in the transaction agreement and seek indemnification from the seller in spite of the buyer having known of the breach or the fact that a particular …

Does an arbitration clause survive the termination of a contract?

An arbitration clause in a contract is generally regarded as an autonomous agreement that may survive the termination of the contract that contains it.

What sections should survive termination of a contract?

Common obligations covered by Survival clauses include Confidentiality, Non-Competition, and Effect of Termination. After these core obligations, the Survival clause can be highly deal-specific, with certain representations, warranties, and other obligations also continuing.

Why do you need an indemnity clause?

In most contracts, an indemnification clause serves to compensate a party for harm or loss arising in connection with the other party’s actions or failure to act. The intent is to shift liability away from one party, and on to the indemnifying party.

What happens if there is no indemnification clause?

Without the clause, the contract may put one or both parties at a higher risk of liability. Providing reasonable protection from risk is essential to clinching the deal.

What happens when you indemnify someone?

Indemnify and Indemnification To indemnify someone is to absolve that person from responsibility for damage or loss arising from a transaction. Indemnification is the act of not being held liable for or being protected from harm, loss, or damages, by shifting the liability to another party.

What is indemnity example?

Indemnity is compensation paid by one party to another to cover damages, injury or losses. … An example of an indemnity would be an insurance contract, where the insurer agrees to compensate for any damages that the entity protected by the insurer experiences.