CORPORATE | The Italian Supreme Court on the applicability of the civil code provision on “promised qualities of the sold goods” to quota purchase agreements

On 26 February 2024, the Italian Supreme Court issued its judgment in case No. 5053, ruling that the direct purpose of a quota purchase agreement is the acquisition of an equity interest in the target’s corporate capital, whereas the target’s assets only fall indirectly within the scope of the contract. Based on these premises, which are in line with the existing case law, the Court reiterated that the value and the features of the assets of the target company cannot be qualified as “promised qualities of the sold goods”, whose absence entitles the buyer to sue the seller under Article 1497 of the Italian Civil Code. Therefore, in the event of the misrepresentation thereof, the buyer does not have the right to seek a reduction in the purchase price, the termination of the contract or compensation for damages, unless specific representations and warranties (“business warranties”) have been expressly given by the seller in the quota purchase agreement.

Newsletter n. 97 – June 2024