Warranty and indemnity claims: what to do in the first ten days reduces to three steps: preserve the record, read the notice clause in the purchase agreement as its own contract, and send a notification matching its required form before doing anything else. Quantifying the claim first is the most common way a valid claim gets lost.
Who this concerns
This situation arises after closing, usually weeks or months in, when a buyer finds that something in the target does not match what the accounts, the disclosure letter or the seller's representations said it would. Overstated receivables, an undisclosed dispute, a tax position that turns out to be wrong, an environmental liability nobody flagged. The buyer's finance team spots it first, in-house counsel gets pulled in second, and by day three someone is asking whether there is a claim.
It also concerns the seller on the receiving end of a notice, who has ten days or fewer to work out whether the claim is even properly made before deciding how to respond. And it concerns whoever holds a warranty and indemnity insurance policy, buy-side or sell-side, because most policies have their own notification wording that runs in parallel with the contract and does not automatically track it.
This sits within the wider contracts and transactions practice at Lodline, alongside the mechanics of the sale and purchase agreement itself: price mechanisms, caps, baskets and the interaction between a warranty claim and a completion accounts dispute.
What the law says
The notice clause in the sale and purchase agreement is the primary source of the rules that apply here, not general statute. Under Swedish law as it currently stands, the general principles of contract interpretation and good faith inform how an ambiguous notice clause is read, but they do not extend a deadline the parties wrote down and agreed to. If the clause says notice must be in writing, must specify the warranty relied on and must be served within a stated number of business days of the buyer becoming aware of the matter, that wording controls.
General contractual limitation rules exist independently of the notice clause and typically run for a much longer period than any contractual notice window. In practice they rarely become relevant, because a claim that misses the contractual notice deadline is usually barred under the contract itself long before the general limitation period would ever be reached. Treating the two as interchangeable, on the assumption that a longer general limitation period gives more breathing room, is one of the more expensive misreadings of this area.
Where the sale and purchase agreement is silent on a point, such as what counts as sufficient detail in a notice, Swedish default contract principles fill the gap, and courts and arbitral tribunals read the clause against what a reasonable commercial party in the buyer's position would have understood it to require.
How it works in practice
Day one and two: preserve the record
Before anything else, identify who inside the buyer's organisation knew what, and when. Email threads, internal memos, board packs and the due diligence file all need to be locked down before routine document retention policies delete anything. A claim that turns on the buyer's date of actual knowledge, which most notice clauses do, is only as strong as the buyer's ability to prove that date later. This is not a legal step so much as an IT and records step, and it is the one most often skipped because it feels less urgent than drafting the notice itself.
Day two and three: find the actual notice clause
Do not work from memory of what the notice provisions "generally" say. Pull the executed sale and purchase agreement, find the notice clause specifically for warranty and indemnity claims (it is often separate from the general notices clause used for correspondence), and read it line by line: form, content requirements, recipient, method of delivery, and the deadline itself, together with what triggers the deadline to start running. Some clauses run from the breach, others from discovery, others from a fixed date after completion. These are not interchangeable and the difference changes the calendar entirely.
Day three and five: assess exposure without committing to a number
A rough internal estimate of quantum is useful for deciding whether the matter is worth pursuing at all. A precise, defensible quantum exercise is not needed to serve a valid notice, and most notice clauses do not require one. Spending the first week building a detailed loss calculation instead of getting the notice out is a common way of running past the deadline on a claim that was otherwise sound.
Day five and six: decide who needs to know, and who must not
Internally, the transaction team, finance and whoever holds authority to make representations to the seller need to be aligned early, because inconsistent internal messaging becomes evidence later. Externally, nothing should go to the seller, the seller's advisers or a warranty and indemnity insurer informally, by phone or in a casual email, before the formal notice is ready. An informal heads-up that later contradicts the formal notice, or that concedes a point the buyer did not need to concede, weakens the position it was meant to protect.
Day six and eight: draft a notification that matches the form the contract requires
The notice needs to identify the specific warranty or indemnity relied on, describe the facts giving rise to the claim in enough detail that the seller can investigate, and, where the clause requires it, give a good faith estimate of loss. It does not need to be a pleading. It does need to track the clause's own wording closely enough that the seller cannot argue the notice fails to satisfy the contract's own test for what a valid notice looks like.
Day eight and nine: consider the insurer, if there is one
Where a warranty and indemnity insurance policy sits behind the deal, its notification wording is a separate contract with its own clock, and it rarely runs on exactly the same deadline as the sale and purchase agreement. Missing the policy's notification window can leave a buyer with a technically valid claim against the seller but no cover behind it, which in practice often means no realistic recovery at all. The policy documents need to be checked in parallel with the sale and purchase agreement, not afterwards.
Day nine and ten: serve the notice and calendar what happens next
Serve the notice by the method the clause specifies, to the address or recipient it specifies, and keep proof of delivery. Once served, most agreements set out a further sequence: a period for the seller to respond, a period for negotiation, and a fallback to a dispute resolution mechanism if the matter is not resolved. Calendar all of these dates on day ten, not after the notice is sent and the immediate pressure has lifted.
What to check before anything goes out
- The exact trigger date the clause uses to start the notice period, and whether it is defensible on the facts.
- Whether the notice clause for warranty and indemnity claims is the same one used for general contractual notices, or a separate provision with different requirements.
- Whether a warranty and indemnity insurance policy exists, and whether its notification deadline is shorter than the contractual one.
- Whether any internal communication has already been sent to the seller that could be read as an informal notice, starting a clock nobody intended to start.
- Whether the disclosure letter contains anything that could be argued to have disclosed the matter already, which would defeat the claim regardless of timing.
- Who has authority within the buyer's organisation to sign and send the notice, and whether that authority is properly documented.
Frequently asked questions
Does the buyer need to prove the amount of the loss before sending the notice?
No. Most notice clauses require identification of the warranty breached and the facts relied on, and sometimes a good faith estimate of loss, but not a final calculation. A precise quantum exercise can follow the notice. Waiting for one before sending anything is one of the more common reasons a valid claim is later challenged on timing.
What happens if the buyer and seller disagree about control of the target after the notice is sent?
Disagreement over who controls decision-making at the target company after a claim is raised is a separate issue from the warranty claim itself, but the two often surface together, particularly where the seller retained a minority stake or board seats. Where that overlap exists, the underlying shareholder relationship needs to be reviewed alongside the claim, not treated as a distraction from it.
Is the shareholders' agreement relevant to a warranty and indemnity claim?
It can be, where the seller remained a shareholder after closing or where the sale and purchase agreement cross-refers to obligations set out in a separate shareholders' agreement, known in Sweden as an aktieägaravtal. If that document contains its own notice or dispute provisions touching on the same facts, both sets of provisions need to be read together, not in isolation.
The numbers
There is no statutory figure that applies uniformly to warranty and indemnity notice periods. The number that matters is whichever one is written into the specific sale and purchase agreement: the number of business days after discovery or after a fixed date, the monetary threshold below which individual claims do not count (the de minimis), the aggregate threshold below which no claim can be brought at all (the basket), and the cap on total recovery. All four are negotiated figures specific to the deal, not defaults set by law, and none of them can be assumed by reference to what is typical in the market. The only number that has any bearing on whether a claim survives in the first ten days is the notice deadline in the document actually signed.
Where it usually goes wrong
The most common failure is treating the notice deadline as a soft target because the underlying claim looks strong on the facts. A well-evidenced breach that misses a strict contractual notice deadline is, in most cases, no longer a claim at all; the strength of the underlying facts does not extend a clock that has already run out.
The second common failure is an informal approach to the seller before the formal notice, whether by phone, in a meeting, or in an email that was not intended as a legal notification but reads as one. Once a communication has effectively put the seller on notice of the substance of the claim, it can become the operative date for limitation purposes even if it does not comply with the clause's formal requirements, and it can also be read later as narrowing the scope of what was actually claimed.
The third is confusing the general limitation period under Swedish contract law with the much shorter contractual notice window, and assuming there is more time than there actually is.
A separate set of issues arises where the seller, the seller's parent company, or the assets available to satisfy a claim sit outside Sweden. A notice served correctly under Swedish contractual principles may still need to be delivered in a form and to an address that satisfies requirements in the seller's own jurisdiction, particularly where the sale and purchase agreement's governing law and forum clauses point to a different country for enforcement than for the contract's substantive terms. Where the seller's parent company sits abroad and the local seller entity has since been wound down or stripped of assets, the practical question is not whether the claim is valid but whether there is anything left to enforce it against, and that question needs to be asked in the first ten days, not after a favourable notice period has been secured with nothing behind it.
What to do next
This covers what a buyer or seller can and should do without outside help in the first ten days: preserve the record, find and follow the actual notice clause, and get a compliant notification served on time. It does not cover whether the claim is actually worth pursuing once the numbers are in, how it interacts with a price adjustment mechanism in the same transaction, or how strong the position looks once the seller responds. Our page on price mechanisms in share purchase agreements covers how a warranty claim and a completion accounts dispute can end up running side by side in the same deal.
Where the question is whether a specific notice, on a specific set of facts and a specific contract, is likely to hold up, that is an assessment of the documents rather than of the general position, and it starts with a conversation about the specific claim.