Series 79 practice questionhardRepresentations and Warranties
What is an indemnity basket in the context of acquisition agreements?
- AA cap on the maximum amount of indemnification
- BA threshold amount below which the seller is not liable for indemnification claims✓ Correct answer
- CA time period for indemnity survival
- DA provision requiring the buyer to indemnify the seller for tax liabilities
Explanation
Why B — A threshold amount below which the seller is not liable for indemnification claims
An indemnity basket sets a minimum threshold for claims before the seller is responsible for indemnification. Confusing baskets with caps or time limits is a frequent trap in exam questions.
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