M&A Foundations · glossary
A floor for warranty claims: the seller pays nothing until valid claims together pass an agreed threshold. A tipping basket then makes the seller pay the whole amount, and an excess-only basket only the part above it. Sunrise has a €420,000 tipping basket. Clause 9.3 · Chapter 11
Explained in Chapter 11, Warranties and Disclosure, of M&A Foundations.
Also explained in Legal Due Diligence.
The basket. Recall from Chapter 11 that the basket is an aggregate threshold: the seller has no warranty liability until total claims cross it. The fight is rarely about whether to have one — it is about what happens when it is crossed. A tipping basket (US lawyers say “first-dollar”) means that once total claims exceed the threshold, the seller pays the whole amount, from the first euro. An excess-only basket — a true deductible — means the seller pays only the amount above…Read Chapter 14, Negotiation: How Points Get Traded →
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