The Law of Corporate Finance: General Principles and EU Law: Volume III: Funding, Exit, Takeovers

16.4 Remedies (Indemnities) 473

tion to assess).^44 The vendor will also try to qualify its obligations by materiality
clauses and use caps and limitation of liability clauses.
Classification of the deal and the scope of statutory remedies. The nature of
remedies and their application under the legal background rules typically depend
on:

• the classification of the object as shares or assets (in some countries, the sale of
  all or practically all shares can be regarded as the sale of all assets of the target
  company);


• the effect of the classification on the scope of legal rules on the sale of movable
  goods and rights (if the sale of shares is regarded as the sale of all assets of the
  target company, typically legal rules on the sale of movable goods can apply);
  and


• the effect of the classification on the application of the legal background rules
  on the normal quality of the object, damages, and price reduction (if the sale of
  shares indeed is regarded as the sale of all assets of the target company and the
  sale is governed by legal rules on the sale of movable goods, it remains to be
  decided how far a share deal is regarded as an asset deal).

This can be illustrated by the traditional position of German case-law according to
which a share deal can be regarded as an asset deal when sufficiently many shares
are sold.^45 German case-law has influenced part of the doctrine in the Nordic
countries.^46

If the share deal was regarded as an asset deal, the sale was governed by the original provi-
sions of the BGB on the sale of movable goods. The applicable provisions also influenced
the required characteristics of the object and the remedies available to the acquirer.^47 The
previous differences between liability rules applicable to the sale of movable goods and the
sale of rights under German law were abolished through new rules introduced by the
Schuldrechtsmodernisierungsgesetz which codified and unified the liability system.^48 This
means that the same liability rules now apply to share deals and asset deals.^49 However, the
distinction between the sale of goods (Sachkauf) and the sale of rights (Rechtskauf) re-

(^44) Schmidt KM, Private Equity: Current M&A Issues for Buyers. In: PLI, Eighth Annual
Private Equity Forum, Corporate Law and Practice Course Handbook Series (2007)
p 129.
(^45) See, for example, BGHZ 65, 246 and already RGZ 120, 283.
(^46) See Mäntysaari P, Mängelhaftung beim Kauf von Gesellschaftsanteilen. Swedish School
of Economics and Business Administration, Helsingfors (1998).
(^47) See, for example, Gaul B, Schuldrechtsmodernisierung und Unternehmenskauf, ZHR
166 (2002) pp 40–41.
(^48) § 437 BGB. The Schuldrechtsmodernisierunsgesetz entered into force on 1 January

2002. See, for example, Gaul B, Schuldrechtsmodernisierung und Unternehmenskauf,
      ZHR 166 (2002) pp 35–71; Schröcker S, Unternehmenskauf und Anteilskauf nach der
      Schuldrechtsreform, ZGR 2005 pp 63–100; Triebel V, Hölzle G, Schuldrechtsreform
      und Unternehmenskaufverträge, BB 2002 pp 521–537.

(^49) See in particular § 453 BGB.