How does the basket and cap concept relate to the survival of representations?
New Jersey business transactions attorney, Harold I. Steinbach, explains how the basket and cap concept relates to reps and warranties.
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As far as the time period how long reps last, in New York a normal contract claim is six years. There’s a statute of limitations of six years for contract claims. A seller will try to limit it and say on certain representations you must make a claim within a year or a year and a half. So when I’m the seller’s lawyer, I really push to shorten those periods to a year and a year and a half wherever possible. ‘Cause you’re in the honeymoon phase, it’s like a marriage, nobody wants to admit it didn’t work out yet, so people are very loathe to make a claim early on. So the seller tries to shorten it and the buyer, obviously, resists that, but generally, you can get most of them down significantly, although certain things like tax and environmental and pension a buyer will not limit but most other things are subject to negotiation.