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Due diligence is beneficial and is of an importance for the buyer in
order to determine the risks, liabilities, scope of representations and
warranties of the seller and the value of the target enterprise, and for
the seller in order to have a possibility to rectify any potential obsta-
cles.
The due diligence may be conducted by the buyer or the seller. The
seller shall provide all necessary documentation in relation to the tar-
get to the buyer in a virtual or physical environment. The buyer shall
have the opportunity to conduct an examination on the target by
reviewing such provided documentation.
The seller may also conduct this due diligence (vendor’s due dili-
gence). The seller provides the buyer with the result of the due dili-
gence conducted by independent and specialized persons. The seller
may warrant that all information provided is accurate and complete. In
such a case the seller is in an advantageous position during negotia-
tions for having had the opportunity to take measures against certain
risks which may be faced.
Consequences of Conducting a Due Diligence
Due Diligence Conducted Prior to the Execution of the
Agreement or Prior to the Transfer of the Rights
The buyer may conduct a due diligence prior to the execution of
the agreement. The buyer shall purchase the sold good based on the
report prepared as a result of this due diligence. If the seller provides
all necessary documents for this examination and the buyer purchases
the sold good based on the due diligence, the responsibility of the
buyer from the warranty against defect of the sale will be limited. This
due diligence shall constitute the examination of the sold good by the
buyer. The responsibility of the buyer for warranty against evident
defects that may be detected as a result of this examination (and defect
that may be detected without any need for examination) will cease.
The acceptance by the buyer of the legal due diligence report pre-
pared by the seller shall delimit the responsibility of the seller with
respect to warranty against defects to the same extent as the buyer’s
due diligence. Nevertheless, such a report may at the same time be con-
sidered as a promise of quality in relation to the sale by the seller.
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