Portuguese Supreme Court of Justice decision of 1 March 2016 regarding warranty clauses in controlling interest sale and purchase agreements

In this decision, the STJ accepts, under the principle of contractual freedom set out in article 405 of the Portuguese Civil Code, the validity of warranty clauses – in the form of express warranties (garantias convencionais) or warranty obligations (obrigações de garantia) – by virtue of which the parties contractually agree to allocate the risk resulting from non-verification of the statement of fact covered by the warranty to the seller, transferring such risk to the seller, which under normal business risk-sharing would fall to the buyer…