Identifying and hedging the risk of the unknown is one of the biggest risks in business documentation. If unknown liabilities arise – or known liabilities are greater than anticipated –parties want recourse to address the economic loss. “Caps” and “baskets” are used to address this problem. Caps are the the total amount for which one party may be liable to the other party post-closing. “Baskets” are the amount of loss one party must incur, if any, before seeking recourse to the other party. The variations and interplay between caps and baskets can be highly complex. This program will provide you with a practical guide to the uses, types, and drafting traps of caps and baskets in business transactions.
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