Anonymised, illustrative composite. A seller's right to update its disclosure schedules before closing let it disclose a lawsuit filed after signing. Because of how the update clause was drafted, the same update that let the buyer close also erased its indemnity for the very lawsuit it disclosed.
At a glance
A buyer agreed to acquire the assets of a distribution business for $11,000,000, signing on Day 0 with closing scheduled 45 days later. The purchase agreement gave the seller a right, standard in agreements with a delayed closing, to update its disclosure schedules before closing “to reflect matters arising after the date of this Agreement,” with the closing condition that the representations remain true satisfied against the schedules “as updated” rather than as originally delivered.
On Day 40, a customer of the target filed a $640,000 lawsuit — a genuinely new event, not something the seller had concealed at signing. On Day 44, the seller updated the litigation disclosure schedule to add it, exactly as the update clause contemplated. The buyer had little practical choice but to proceed: a single $640,000 customer claim in an ordinary-course industry was not an obvious basis to walk away, and the buyer's own financing was already committed to a Day 45 close. It closed on schedule.
The trouble was in the clause's own wording. It read: “the Disclosure Schedules, as updated pursuant to this Section, shall be deemed to qualify the representations and warranties of the Seller for all purposes of this Agreement” — not limited to satisfying the closing condition. Once the litigation schedule was updated to disclose the new lawsuit, the representation about litigation was, on the agreement's own terms, no longer breached with respect to that lawsuit for any purpose, including indemnification. The buyer closed having been told about a $640,000 problem it had just lost the ability to make a claim for.
$11,000,000 purchase price. New lawsuit disclosed four days before closing: $640,000 claimed. Indemnity basket in the agreement: $50,000. Had the update clause cured the closing condition only, the buyer's likely recoverable claim — $640,000 less the $50,000 basket — would have been roughly $590,000. Because the same update cured the indemnity as well, the buyer recovered nothing.
No statute decides whether updating a disclosure schedule cures only the closing-condition bring-down, or the indemnity as well — that depends entirely on how the update clause itself is drafted, and specifically on two different effects that a schedule update can have, which well-drafted agreements keep separate and badly-drafted ones do not.
Read the unit. A closing-condition cure asks whether the buyer still has to close given what the updated schedules now show — a decision the buyer makes going forward, with the option to walk if the update is serious enough. An indemnity cure asks whether the seller still owes the buyer compensation for what the update disclosed — a decision about money already spent buying a business with that problem attached. A clause that cures “for all purposes” collapses those into one decision: closing after an update becomes, automatically, giving up the indemnity for whatever the update disclosed. A clause limited to satisfying the closing condition — commonly paired with an express carve-out preserving indemnification for any newly-disclosed matter — keeps them separate, letting the buyer close on a commercially minor new item without silently forfeiting its right to be made whole for it.
Contra proferentem — construing genuine ambiguity against the party that drafted the clause — was checked and does not help the buyer here either. It is a common-law canon of construction, not a statute, and even on its own terms it applies to genuine ambiguity in a standard-form contract one side had no real ability to negotiate. This purchase agreement was negotiated at arm's length between two represented parties, and “for all purposes” is not ambiguous — it says plainly that the update qualifies the representations for every purpose the agreement uses them for, indemnification included. There is no ambiguity here for a construction canon to resolve.
The buyer closed on Day 45 having satisfied its own financing deadline, then sought indemnification for the $640,000 lawsuit once it materialized as a real cost. The seller pointed to the update clause's own “for all purposes” wording: the representation had been qualified by the updated schedule before closing, so there was no breach left to indemnify. The buyer had no answer to the clause's own text and recovered nothing.
A schedule-update clause drafted to cure the closing condition only, with a carved-out indemnity for newly-disclosed matters, would have let the buyer close on the same timeline while preserving roughly $590,000 of recovery for the lawsuit — the difference between the two drafting approaches on this file, dollar for dollar.
The tell was in the drafting history, not the events. The update clause had been carried forward from an earlier deal template built for a fast, all-cash close where an update effectively meant walking away, not closing and claiming — a context where curing “for all purposes” made little practical difference. Nobody revisited the clause's scope when it was reused on a deal where closing despite a material update was the buyer's only realistic option.
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