£300m+ corporate disputes: won or lost on drafting

In high value corporate disputes, the starting point is usually simple. If you prove breach, you should recover your loss. In practice, that is often wrong.

We are seeing more Commercial Court litigation where outcomes turn not on wrongdoing, but on how the contract allocates risk. In other words, the dispute is won or lost on drafting.

The decision in Veranova Bidco LP v Johnson Matthey plc is a clear example.

Veranova Bidco LP v Johnson Matthey plc

The buyer proved a key warranty in a £300m+ share purchase agreement was false giving rise to a breach of warranty finding. It also established that disclosure was inadequate. On any commercial view, that should have led to a successful breach of warranty claim.

It did not.

The claim failed because the Share Purchase Agreement (SPA) limited recovery to fraud and that high threshold was not met.

For corporates involved in M&A transactions and high value disputes, the point is not to avoid litigation. It is that litigation risk, leverage and recovery are defined at the point of contracting. Get that right and a claim can unlock real value. Get it wrong and even a strong position on liability may achieve nothing.

Background of Veranova Bidco LP v Johnson Matthey plc

The dispute arose from the acquisition of a Health Business under a share purchase agreement. A central issue was its largest customer and a contractual price match mechanism triggered by a competing offer at a materially lower price.

The buyer understood that there was pricing pressure. What it did not know was the scale of that pressure and crucially, that a competing offer was materially below the price range previously discussed.

The SPA included a warranty that the business was not renegotiating any material term of a key contract which would have an adverse effect.

The buyer alleged that:

• Renegotiations were already underway
• Those renegotiations would materially reduce the value of the business
• The true position had not been fairly disclosed in the disclosure letter

That formed the basis of a substantial breach of warranty claim.

The Cout’s findings on liabiltiy

The Commercial Court made two key findings.

• First, there was a breach of the key contracts warranty. Renegotiations had effectively begun once the price match mechanism was engaged and the outcome would have an adverse impact on the business.
• Secondly, disclosure was inadequate. General references to pricing pressure and ongoing discussions did not fairly disclose the nature or scale of the issue, including the risk of a significant price reduction and its operational consequences.

This is a critical point in M&A disputes. Disclosure must allow a reasonable buyer to understand both the nature of the risk and its commercial impact. Generalised wording will not always be sufficient in high value transactions.

On liability alone, the buyer had a strong case.

Why the claim still failed

Despite proving breach of warranty and inadequate disclosure, the claim failed in full.

The SPA contained a limitation of liability regime which restricted warranty claims to cases of fraud or wilful misconduct.

This required the buyer to prove that a relevant individual:

• Knew the underlying facts
• Understood the warranty framework in the SPA
• Knew, or was reckless as to, the warranty being false

The Court applied that test strictly.

It rejected any attempt to aggregate knowledge across different individuals within the organisation. Fraud under English law requires conscious dishonesty. It is not enough that different people hold different pieces of the picture.

On the evidence:

• Some individuals knew the commercial position
• Others understood the transaction documents
• But no single individual had both the knowledge and the necessary dishonest state of mind

At most, this pointed to failures in internal communication or process. That is not fraud.

The result was a complete bar to recovery.

Risk allocation in SPAs: where disputes are really decided

This case is a clear illustration of how English courts approach contractual risk allocation in share purchase agreements.

The parties agreed that breach of warranty claims would be restricted and only fraud would unlock liability. The Court enforced that structure.

Importantly, the underlying complaint succeeded. The warranty was false and disclosure was inadequate. But the contractual framework determined the outcome.

For corporates, this reinforces a key point. In high value M&A disputes, the real battleground is the limitation of liability regime. Caps, carve outs and thresholds will determine whether a claim has any real value.

Winning on liability is not enough

A key takeaway from this case is that establishing breach is only one stage of the analysis.

In £1m+ commercial disputes, the critical questions are usually:

• Is liability contractually limited or excluded?
• Can any carve outs, particularly fraud, realistically be established?
• How do the warranty, disclosure and limitation provisions in the SPA interact?

This is something we see repeatedly in practice. What appears to be a straightforward claim for breach of warranty quickly becomes a technical exercise in accessing the contractual route to recovery.

In Veranova’s case, the buyer succeeded on the facts but failed on the structure of the agreement. That distinction is often decisive.

Fraud: a narrow and difficult route to recovery

The case also highlights how difficult fraud claims are in corporate transactions.

The Court confirmed that:

• Fraud requires conscious dishonesty by an individual
• Corporate knowledge cannot be pieced together from multiple innocent actors
• The threshold is significantly higher than breach of warranty or negligence

In complex M&A transactions, responsibility is spread across teams, advisers and decision makers. That makes fraud inherently difficult to prove.

For claimants, that creates a significant evidential hurdle. For defendants, it provides a powerful defence where limitation clauses are engaged.

What could the buyer have done differently?

The outcome was driven by the SPA drafting, not the underlying facts.

There are several practical lessons for those involved in corporate transactions.

• Firstly, they could have avoided a fraud-only gateway to liability. Limiting claims to fraud significantly reduces the prospects of recovery. In most transactions, fraud should operate as a carve out, not as the sole route to liability.
• Secondly, ensure proper protection for key commercial relationships. Where value is concentrated in a small number of contracts, the SPA should include tailored warranties and disclosure obligations.
• Thirdly, focus on how disclosure interacts with liability. It is not enough to consider what has been disclosed. The real question is whether that disclosure has any practical impact on the ability to bring a claim.
• Fourthly, align transactional and disputes strategy early. Issues identified during due diligence should be considered through the lens of enforcement post-completion. The drafting stage is often the only realistic opportunity to secure meaningful protection.

Strategic implications for commercial litigation

From a disputes perspective, the position is clear.

In high value commercial litigation, early contractual analysis is often decisive. A well advised party will:

• Assess enforceability before committing to a claim
• identify pressure points in the SPA and limitation regime
• use those points to shape litigation strategy, including settlement and ADR

In the right case, a breach of warranty claim can create significant commercial leverage. In the wrong case, it can result in substantial cost with no recovery.

The difference usually comes down to early analysis and strategic positioning.

Conclusion

Veranova demonstrates a straightforward but important point. Proving breach of warranty is not enough. That should be considered at the very start.

The buyer established that the warranty was false and that disclosure was inadequate. It still recovered nothing because it could not satisfy the contractual threshold for liability.

For corporates, the takeaway is not to avoid disputes. It is to approach them strategically.

High value commercial claims can be powerful tools for recovery and leverage. But their success depends on early, rigorous analysis of the share purchase agreement, the evidence and the available routes to recovery.

At this level, outcomes are rarely determined at trial. They are shaped at the drafting stage and implemented through a focused litigation strategy.