When drafting an indemnity clause in an asset purchase agreement, parties may wish to limit the time period in which the indemnity clause is to be effective. (This is referred to as the indemnification period.)

This report discusses assets that had been sold (through an asset purchase agreement) to the purchaser on a servicing released basis. The vendor in this case indemnified the purchaser against the breach of certain representations and warranties for a set period of time.

Read the article here.

Takeaway:

• Parties entering into an asset purchase agreement should consider inserting an indemnification period in their indemnity clause