1. Any information contained in or referred to in this letter will be treated as a disclosure with respect to this warranty for which such information can reasonably be considered relevant. Specific disclosures are the seller`s ability to disclose specific facts that, if not disclosed, would constitute a breach of warranty. Specific information is provided by reference to the guarantees themselves. For example, if there is a warranty in the purchase agreement that the target company is not a party to a legal dispute, the seller will have to disclose all details of any ongoing litigation affecting the company. In addition, some safeguards may require that certain information be listed in the disclosure letter or included in the disclosure package (e.B. major contracts, pension plans, etc.). When discussing disclosures, the seller should review each warranty one by one and determine whether it is true and accurate. Any inaccuracies must be noted in their entirety (and supporting documents found and copied) as the basis for specific disclosure of this warranty. Key personnel and professional advisors (p.B accountants) are essential for this exercise. Each individual warranty should be treated in this manner to ensure that disclosures are as complete as possible.

If possible, the seller must fully declare the breach, quantify the consequences and identify the affected warranties. It is not enough to provide the buyer with the simple facts of the disclosure; it must be « specified » in terms of the details, effect and guarantees to which reference is made. This letter is divided into three parts, an introduction, general information and a specific disclosure. The introduction clarifies the subject of the letter and refers to the applicable business purchase agreement. The disclosure letter usually takes the form of a letter from the seller to the buyer. It is prepared by the seller`s lawyers. It is usually divided into two parts: general disclosures and specific disclosures, and includes copies of documents disclosed to the buyer (the disclosure package). The seller must ensure that all relevant employees are consulted to ensure that the disclosures provided are as accurate and complete as possible. Revisions and updates to the disclosure letter often take place until the end.

According to the definition of « disclosed » negotiated between the parties and included in the purchase agreement, to be valid, all specific disclosures must be complete and fair without exception and contain sufficient detail for the buyer to understand the nature and scope of the allegedly disclosed matter. If a disclosure is not specific and accurate, seller runs the risk that a court will conclude that such disclosure is not sufficient to exclude a claim for breach of warranty. The disclosure letter is a key document in any sale or purchase of a business. It is the seller`s ability to make « disclosures » against the warranties that the buyer demands from the seller. If a seller does not provide enough information, they may face breach of warranty claims that could allow the buyer to recover part or even all of the purchase price. Full and appropriate disclosure is in the interest of both parties. For the seller, it can provide protection against a breach of a warranty claim, or at least provide a successful defense against such a claim. For the buyer, it complements the due diligence exercise by giving the buyer the most complete picture of the target company or company. This disclosure letter is issued by a seller (or a seller`s lawyer) prior to the conclusion of the sale of its assets or business to a buyer. It is intended to protect the seller against future claims of the buyer under the guarantees contained in the commercial purchase agreement (BPA). It is also a way for the seller to provide the buyer with information that might be of particular interest to him about the business or assets to be sold. The form of a disclosure letter can be divided into three parts; Introduction, general information and specific information.

The introduction clarifies the subject of the letter and refers to the applicable purchase agreement, while the general disclosures cover certain matters that are in the public record and/or of which the buyer should be informed on the basis of pre-contractual requests or that a buyer would normally make. As a general rule, general disclosure parts are prepared as widely as possible. It can be said that the part of the special disclosures is the most important, since a misrepresentation or non-disclosure of a particular matter constitutes a breach of warranty. From time to time, a seller may want to refer to certain documents in a particular disclosure by attaching the documents, which can also be called a disclosure set. Of course, the disclosure package must include all the documents mentioned in the guarantees and/or specific information. It must be said that a disclosure letter or a document that has the same characteristics as a disclosure letter must be prepared by a lawyer because it is advantageous for the parties who enter into a purchase contract. Parties should be aware that a poorly worded disclosure letter may cause the seller to refund the full purchase price or may not be able to claim the purchase price from the buyer because it has been misled. Finally, the seller provides specific information tailored to the respective transaction. These concern specific guarantees in BPA. Safeguards and disclosures must be considered together. Please see our Note on Warranties and Tax Clauses in Share Sales for a more detailed explanation of the purpose of the guarantees.

If a legitimate fact proves to be false or misleading, the buyer may make a claim for reimbursement of his losses, whether or not he relied on the warranty in question. However, such a claim will be rejected if the facts that led to the violation have been disclosed. A newsletter is a key document in many sales and purchases of business transactions, as well as in the sale of assets and shares. A disclosure letter serves two main purposes and provides the buyer with specific information about the business they are going to acquire from the seller to assist them in their due diligence, as it is designed to include general and specific information about the seller`s warranties in the purchase agreement. It should be mentioned that if a seller provides insufficient information, this will result in a breach of the warranty, which could allow the buyer to recover part or even all of the purchase price. No matter how thorough the buyer is in their due diligence process, the first draft of the disclosure letter almost always raises previously undiscovered questions. It is important for the purchaser to inquire about the draft disclosure letter and related disclosure documents to ensure that the disclosures are clear and unambiguous and that they fully understand the consequences of their acceptance. It is better for the buyer to discover the problems in the negotiation phase of the transaction rather than having to deal with them after closing. Even if, under Turkish civil procedure law, no procedure is defined with regard to disclosure or disclosure documents, as is the case in customary law, the parties can of course attach a document that has the same characteristics as the disclosure letter.

However, the parties to a dispute may attach supporting documents to their pleadings even if that document is not identified as a letter of disclosure on which they may rely in the event of a dispute. Another possibility is that one party to the dispute must request the court for the other party to disclose a document or evidence proving that the other party is fully aware of the purchase elements in the event of an ongoing dispute. The disclosure letter allows the seller to disclose the warranties, thus avoiding a possible claim by the buyer due to a breach of the warranty. The disclosure letter will also be helpful to the buyer, alerting them to any « skeleton in the closet » that may not have been discovered during the due diligence process. Such disclosures may cause the buyer to renegotiate the purchase price or demand compensation from the seller. The disclosure package can often be complete and should include all documents mentioned in the specific warranties and/or disclosures. .