In a case that spawned multiple arguments and a 737-paragraph judgment, the High Court has interpreted several clauses in a share sale and purchase agreement (SPA).

The judge had to decide whether the buyer’s claim for breach of warranties was invalid because (among other things) its pre-action notice of claim omitted references to certain warranties, it had allegedly failed to serve proceedings by the required deadline, and the SPA contained a parallel indemnity covering the same subject matter.

The court’s analysis and reasoning on each issue are useful to buyers and sellers of shares in private companies, both when negotiating deal documentation and notifying a claim.

Background

Learning Curve (NE) Group Ltd v Lewis and anor [2025] EWHC 1889 (Comm) concerned an SPA under which Learning Curve (the buyer) bought all the shares in APCymru Limited (the company) from two individual sellers.

The company’s business was providing education and training for young people. For that purpose, it received significant funding from the Education and Skills Funding Agency (ESFA), which was the company’s principal source of income.

The ESFA funding rules are complex, and deviations from the rules can result in an education provider being required to repay amounts to ESFA. Repayment can take various forms, including a “clawback”.

The SPA contained an indemnity from the sellers to the buyer in relation to over-funding (the funding indemnity), under which the sellers agreed to indemnify the buyer in respect of:

“the clawback, recovery or repayment to ESFA… of any sums paid to any Group company in the period from 1 March 2018 up to and including the Completion Date.”

The SPA also contained various warranties relating to the company and its business, including several warranties covering the financial state and funding of the company.

In 2022, an audit by ESFA found that the company had over-claimed funding following certain misapplications of the ESFA funding rules. As a result, the company was required to pay £783,325 back to ESFA by way of clawback.

On discovering this, the buyer claimed against the sellers under the funding indemnity, and the sellers reimbursed the buyer the amount of the clawback (although they later attempted, unsuccessfully, to claim it back).

However, the buyer also launched claims against the sellers for breach of several warranties, alleging that the misapplication of the funding rules had had a substantial adverse impact beyond the clawback. This included reduced future funding and costs incurred in making changes to the way the company delivered training.

The sellers resisted the buyer’s claims for breach of warranty, citing several arguments why it was prevented from doing so. The arguments caused the court to analyse and interpret several parts of the SPA. Its decision in each case is instructive, and so we examine each argument in turn below.

Two-pronged attack

The sellers argued that the parties had already provided for a remedy in relation to potential over-funding in the form of the funding indemnity. That, they said, had been the sole intended mechanism for the buyer to recover in respect of the clawback and, as a result, the buyer was not permitted to claim additionally for breach of warranty.

In support of this, the sellers pointed to paragraph 4 of schedule 5 to the SPA, which stated:

“If the same fact, matter, event or circumstance gives rise to more than one claim for breach of any of the Warranties, or to a claim both under the Warranties, an Indemnity Claim … the [buyer] shall not be entitled to recover more than once in respect of such fact, matter, event or circumstance.” 

They claimed that this prevented the buyer from making two claims in relation to over-funding, one under the funding indemnity and one for breach of warranty.

The court disagreed, noting the following.

• paragraph four prevented the buyer from recovering more than its actual loss from the sellers, but it did not prevent the buyer from bringing claims under two separate provisions of the SPA in relation to over-funding. On the contrary, the wording of paragraph four ("gives rise to a claim … both under the Warranties [and] an Indemnity Claim") clearly envisaged that the buyer might bring parallel claims under the funding indemnity and the warranties;
• the SPA specifically stated that the funding indemnity was “without prejudice to any other rights or remedies available” to the buyer. This suggested that the parties had contemplated parallel claims for breach of warranty alongside claims under the funding indemnity; and
• the SPA also specifically stated that the warranties were “not limited or restricted by reference to or inference from … any other term of [the SPA]”. This suggested that the parties did not mean for the funding indemnity to create a bar to claims under the warranties.

The buyer was therefore entitled to bring claims both under the funding indemnity and the warranties.

What this means

This is an important reminder for sellers on a share or business sale. The fact parties may negotiate a specific remedy or mechanism (such as an indemnity or an escrow) to deal with identified risks does not automatically mean that the sellers are immune from claims under other parts of the SPA (most notably, the warranties).

Often, parties include an indemnity in an SPA in response to a specific matter that has been discovered through due diligence or disclosure. In that case, a buyer may well struggle to bring a warranty claim, as it will arguably have knowledge of the matter when it signs the SPA.

However, where (as in this case) an SPA contains general indemnities that are not drafted to address specific identified risks, this will not be the case. If the parties intend to preclude warranty claims in relation to the subject matter of an indemnity, the SPA should expressly state this.

The notice(s) of claim

Before it could launch a claim for breach of warranty, the SPA required the buyer to serve a notice of claim on the sellers within a particular timeframe.

Paragraph 1.1 of schedule 5 to the SPA stated as follows:

“The written notice of any Warranty Claim … shall give details (in such detail as is reasonably available to the Purchaser at the time) of the nature of the claim, the facts and circumstances giving rise to it and the Purchaser’s bona fide estimate of any alleged loss …”

The buyer gave the sellers written notice of its claims in a letter on 8 April 2022. The notice referred to a claim under the funding indemnity and to a claim for breach of seven specific warranties (identified by paragraph number in the SPA) “amongst others”. It stated that, at that point, the buyer did not have sufficient information to provide an estimate of the amount claimed.

On 14 June 2022, the buyer sent an updated notice of claim. That notice repeated the claims from the first notice (including the same seven specific warranties), but this time provided a figure of £6,862,240 as the buyer’s loss (although it did not explicitly state that this amount was merely an estimate).

However, when the buyer came to issue legal proceedings, the claim form alleged a breach of a further five warranties that had not been specified in the notices of claim. The buyer also claimed a total of £10,180,040 – over £3m more than the estimate included its updated notice of claim.

The sellers argued that the buyer should not be entitled to claim under the five additional warranties that were not specified in the notice of claim. They argued that, based on case law, the requirement in the SPA to state the “nature of the claim” required the buyer to identify each individual warranty it alleged had been breached.

The court disagreed. Although previous case law could be of assistance, all notification clauses turn on their individual wording and must be read in light of their commercial purpose. Although previous cases had established a requirement to refer to specific, numbered warranties, the wording of the notification clauses in those cases differed from that of paragraph 1.1.

The natural reading of paragraph 1.1 was to require the buyer to explain the nature of the claim and the circumstances giving rise to it, which the buyer had done. It could have included an explicit requirement to state the warranties alleged to have been breached, but it did not and so did not have that effect.

The judge’s decision in this respect appears fortified by the facts that the buyer had not set out an exhaustive list of warranties that had allegedly been breached, and that including the five additional warranties in the claim would not affect (or materially affect) the amount of the buyer’s loss. 

The sellers also argued that the buyer should be held to the figure of £6,862,240 in its second notice, and that any claim for breach of warranty should be capped at that amount.

Again, the court disagreed. Paragraph 1.1 clearly required the buyer to provide only a good faith estimate of its alleged loss. Nowhere did the SPA state that a figure provided by the buyer would act as a cap, and to read this into the SPA would distort its plain meaning and commercial purpose. The figure in the buyer’s second notice should therefore be read as an estimate, even though the notice did not explicitly state that it was only an estimate.

What this means

The decision on these points shows the need to pay careful attention to the claim notice requirements in an SPA. The judge’s comments suggest that, absent a specific requirement to do so, a buyer will not need to refer to all specific warranties (and might not need to refer to any specific warranties) when notifying its intention to bring a claim.

However, this will turn on the wording of the notification requirements. For example, it may be necessary to refer at least to some warranties as part of satisfying any requirement to provide details of the nature of a claim. 

Moreover, if the SPA gives a seller the opportunity to remedy an alleged breach of warranty, it is likely that the buyer’s notice will need to specify the relevant warranties so that the seller can understand what needs to be done (see Teoco UK Ltd v Aircom Jersey 4 Ltd [2018] EWCA Civ 23).

Where a notice does refer to specific warranties, it should also state that the list is not exhaustive and that the buyer reserves the right to claim under other warranties or to bring other types of claim.

Finally, if the SPA requires the buyer to state the amount of its likely claim in its notice, it is important to make it clear in the notice that the amount is an estimate, and that it may need to be adjusted. Although, in this case, the court found that the figure in the buyer’s second notice was an estimate even though the notice did not explicitly say this, a buyer should put the point beyond doubt to avoid any dispute.

A question of timing

Under paragraph 1.4 of schedule 5 (which the parties amended on two occasions), having notified the sellers of its claims, the buyer was required to “issue and serve” legal proceedings “by 14 February 2023”, otherwise it would be deemed to have withdrawn the claim.

The buyer issued its claim form on 14 February 2023. The claim form was hand-delivered to the sellers’ home address and to the reception desk at the offices of both their current solicitors and the solicitors who had advised them on the sale.

The sellers argued that the claim form had not been served in time in accordance with the SPA. They said that the phrase “by 14 February 2023” required the claim to be served before 14 February 2023 began – in other words, no later than 13 February 2023.

In support of this, the sellers pointed to clause 1.2.7 of the SPA, which stated:

“if a period of time is specified and dates from a given day or the day of an act or event, it shall be calculated exclusive of that day (unless otherwise agreed in this [SPA])”

The effect of this clause was that a period phrased as commencing “from” a specific date would not include that date. The sellers argued that the same approach should be taken for a period phrased as “by” a specific date.

The court disagreed. The judge endorsed the convention that, when interpreting a contract, unless the contract requires otherwise, fractions of a day are usually ignored and a period specified for an act usually runs until the last moment of the last day of the period.

Clause 1.2.7 said nothing about when a period ended, and it certainly did not state that the final day of a period was excluded from calculating it. Rather, in the judge’s words, it described only the point at which the parties “can start their stopwatch”.

As a result, the buyer had been entitled to issue and serve its claim right up until and including 14 February 2023.

The parties also engaged in a dispute over the meaning of the word “served”. The sellers claimed that “serving” meant bringing the claim to the actual attention of the sellers, which (they argued) had not been done within the relevant time frame.

The court disagreed, finding that the SPA did not specifically define what was meant by service. The parties should therefore be assumed to have adopted the meaning of service in the Civil Procedure Rules (CPR), as the SPA provided for the jurisdiction of the courts of England and Wales, and claims in this jurisdiction are governed by the CPR.

Under CPR 6.14, where a claim form is delivered by hand, service is deemed to occur two business days after the document is delivered. The sellers argued, therefore, that service had in fact occurred on 16 February 2023, which was beyond the deadline in the SPA.

Again, the court disagreed. The judge found that the buyer only had to complete the relevant steps for service by 14 February 2023. In this case, that meant delivering the document to the relevant address, which the buyer had done.

The fact that, under CPR 6.14, deemed service occurred two business days later was relevant to calculating dates for subsequent steps (such as for the sellers to acknowledge service), but it did not create a “dead period” of two business days at the end of the contractual period in the SPA.

What this means

Calculating time periods for legal purposes can be notoriously difficult. It is critical to understand which days are and are not included within a period, particularly if a failure to take action within a specified period may bar a claim.

In the context of a share or business sale, a buyer will often want to wait until the very end of a period to serve notice of claim or to issue and serve legal proceedings. This gives the buyer the maximum amount of time possible to assess the merits and amount of its claim.

However, it is axiomatic that, the closer the end of a period (especially a deadline) approaches, the more a party is susceptible to outside forces that may disrupt their plans and, therefore, the more at risk they are of failing to meet any deadlines.

This is exemplified by recent cases, such as Drax Smart Generation Holdco Ltd v Scottish Power Retail Holdings Ltd [2023] EWHC 412 (Comm), in which a notice of warranty claim served at the last moment was not valid, giving the buyer no time to serve a fresh, compliant notice, and Zayo Group International v Ainger and ors [2017] EWHC 2542 (Comm), in which a buyer attempted to serve a notice of warranty claim on the last day for doing so but failed to serve properly in accordance with the relevant SPA (because it served notice on only six of the seven sellers).

In Drax, the buyer was fortunate, as its notice operated validly for a parallel indemnity claim. (You can read our previous article on the Drax v Scottish Power case for more information.) In Zayo, however, the failure to serve properly meant that the warranty claim was barred.

A buyer notifying a claim should therefore check the relevant SPA carefully for any provisions that specifically deal with periods of time (especially any provisions that explicitly exclude or include the first or last days of a period).

Parties negotiating an SPA (or, indeed, any commercial contract) should give careful thought to any deadlines or periods included within the SPA, ensuring that the language of the contract makes it clear when a period begins and ends.

Access the High Court’s decision in Learning Curve (NE) Group Ltd v Lewis and anor [2025] EWHC 1889 (Comm) on the validity of a warranty claim notice