A disclosure schedule filed the night before signing

The situation

A fund was in the final stage of acquiring a mid-market distribution business, with a purchase agreement substantially agreed and a signing scheduled for 9am the next morning. Under the agreement's structure, the seller's representations and warranties — on litigation, compliance, material contracts and undisclosed liabilities — were each qualified by reference to a set of disclosure schedules to be attached as an exhibit at signing.

Drafts of the schedules had circulated for three weeks and looked, to the buy-side team, essentially final: a short litigation schedule with one immaterial small-claims matter, and a clean regulatory-compliance schedule.

The problem

At 9pm the night before signing, seller's counsel delivered a revised set of schedules. The litigation schedule now listed two additional matters — a supplier dispute and a former employee's wrongful dismissal claim — and a new compliance schedule entry disclosed a pending inquiry from an industry regulator that had apparently been received weeks earlier.

This is exactly the structural risk treadstonelaw's guidance on disclosure-schedule drafting identifies: because sellers typically prepare the first draft, “the first draft inevitably reflects choices about scope, specificity, and framing that can favour whoever wrote it,” and buyer's counsel has to treat every schedule as a document requiring active scrutiny — “asking pointed follow-up questions, requesting more specificity, and cross-checking schedule” entries against what diligence has actually turned up. What that guidance does not reach is the timing problem. A schedule delivered hours before signature is a different risk from a schedule that is merely one-sided, and none of the sources cited below treats late delivery as a settled category with rules of its own. That gap is the subject of this file.

Why it mattered so much

Disclosure schedules are not a formality attached to a signed agreement — they define the actual scope of what the buyer is indemnified for. A representation that the seller has no undisclosed material litigation is, functionally, only as strong as what the schedule actually excludes: anything properly disclosed on the schedule at signing falls outside the representation, and a buyer that signs against a disclosed item has, in substance, agreed to take that risk without an indemnity behind it.

The fund's deal team had roughly eleven hours, overnight, to assess whether the wrongful-dismissal claim and the regulatory inquiry were financially material enough to walk from the deal, renegotiate price, or accept the schedules as delivered. There was no contractual mechanism forcing the seller to give more notice or more time — the agreement simply required schedules to be true and correct as of the date hereof, and the seller had technically complied by delivering them, however late, before signature.

The stakes trace back to what a representation is actually for. As treadstonelaw's own guidance on share purchase agreements puts it, “Representations describe the company the buyer thinks it is buying” — and the disclosure schedule is what converts that description from the seller's word into a document the buyer can actually evaluate before it becomes contractually final. Accept a schedule without reading it against diligence, and the buyer has, in effect, agreed to buy whatever company the seller says it is, on trust, on the very evening before it becomes irrevocable.

The fix

Overnight, the fund's litigation and regulatory counsel assessed both new matters against the purchase price and concluded neither was individually large enough to justify walking, but that the regulatory inquiry in particular carried enough uncertainty to warrant protection beyond the general indemnity. The parties added a narrow, matter-specific indemnity the next morning before signing, carved out of the general basket and cap, covering losses from that specific regulatory matter without a threshold and without the standard cap.

The deal's real lesson landed after closing, in the fund's own process: subsequent purchase agreements now include an express covenant requiring any disclosure schedule update after an agreed date to be delivered with a standalone notice and, for anything newly material, an automatic right to a short delay in signing — converting an overnight scramble into a structured, contractually guaranteed review window.

Takeaways

• • A disclosure schedule is not paperwork attached to a signed deal — it defines the actual boundary of what the buyer is indemnified for. Read every entry as though it were a carve-out, because it is one.
• • A schedule delivered close to signing is a risk in its own right. Do not assume it has had the same scrutiny as the draft that circulated for three weeks — and do not assume the earlier draft is what you are signing against.
• • Negotiate a contractual right to a short delay in signing when a schedule update introduces new, material disclosures — before it happens, not while it is happening at 9pm.
• • A matter-specific indemnity, carved out of the general basket and cap, is the practical answer when a newly disclosed risk is too specific and too late to renegotiate the whole deal over.

Sources

• • Treadstone Law — does it matter who drafts the disclosure schedules? — source of the two quoted passages on drafting bias and on the scrutiny buyer’s counsel owes a schedule. It does not address a schedule delivered late, and does not address what a properly disclosed item does to the indemnity — adjacent on the timing question, not on point.
• • Treadstone Law — share purchase agreements — source of “Representations describe the company the buyer thinks it is buying,” and of the survival structure the matter-specific indemnity was carved out of.
• • Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 — No statute governs a disclosure schedule. Its effect is a question of contractual interpretation, decided on “a practical, common-sense approach” that reads the words against the surrounding circumstances known to both parties when they contracted — which is why what the schedule said at signing is the operative text, not the draft that circulated for three weeks.
• • Bhasin v. Hrynew, 2014 SCC 71 — the outer limit on how a schedule may be presented: parties must not lie or otherwise knowingly mislead each other about matters directly linked to the performance of the contract. Note what it does not give a buyer — the duty of honest performance does not impose a duty of loyalty or of disclosure, so late delivery alone is not bad faith.