Contingent liability is key issue for new wave of manufacturer M&As; lawsuits stemming from 1980s acquisitions provide invaluable negotiation and drafting lessons

Article Abstract:

Buyers and sellers of manufacturing enterprises who conduct thorough due diligence during a sale and carefully negotiate and write all sales contracts will minimize the risk of contingent liabilities at some later point. Due diligence should include an expanded products liability inquiry with review of all customer complaints and pre-suit demand letters and making sure products can be identified with manufacturers. Sales contracts should include an allocation of financial liability in future suits, privilege protection procedures, indemnity limits and product recall procedures.

Acquisitions and mergers, Corporations, Tort liability, Tort liability of corporations, Liability of successor corporations, Corporate succession liability

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Companies' projections pose problems

Article Abstract:

Additional stock exchange rules may be a better way of addressing corporate liability for selective disclosure than expanding the coverage of insider trading. Corporate liability for inaccurate projections was addressed by the 9th Circuit in 1989 in Apple Computer Securities Litigation, in which the court stated that such projections could form the basis for a securities fraud suit. The SEC instructions for Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) also deal with which financial projections companies are required to disclose.

Securities fraud, Disclosure (Securities law)

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