For investors active in cross-border deals, knowing the practical differences between English law and New York law share purchase agreements (SPAs) can be a decisive advantage. While both jurisdictions support sophisticated, contract-driven transactions, the structure, drafting philosophy and risk-allocation mechanics of the SPAs in each jurisdiction differ in several ways. This article summarises the key distinctions investors are most likely to encounter.

The author of this article is qualified to practise law in England & Wales and in New York (but note that Avery Law itself does not provide any advice other than English law advice).

Documentation Philosophy: Disclosure vs Representation-Driven Models

A key difference is in the conceptual role of warranties / representations and the associated disclosure framework.

Under English law:

• Warranties are typically narrower in scope
• Representations are primarily associated with tort-based misrepresentation (unless expressly made contractual) and are therefore customarily excluded as they risk opening the door to misrepresentation claims outside the SPA’s limitations on liability
• A detailed disclosure letter qualifies warranties by reference to matters fairly disclosed
• Liability analysis relies heavily on what has been disclosed and how clearly

Under New York law:

• Sellers give broader and more detailed representations and warranties
• Representations have a well-defined contractual role and if false, a buyer may have contractual remedies and, absent effective non-reliance language, tort-based remedies (e.g. negligent misrepresentation)
• Parties can agree that only specified representations are relied upon and remedies are limited to those in the SPA (i.e. the door can be closed to misrepresentation claims outside the SPA’s liability limitations)
• Disclosure occurs primarily through disclosure schedules, but the legal emphasis sits more squarely on the text of the representations and warranties themselves
• “Sandbagging” (where a buyer knows before completion that a representation is inaccurate but proceeds and later claims breach) and knowledge qualifiers are often critical negotiation points

In summary, the English-law model customarily excludes representations and pushes buyers to investigate disclosures more deeply, whereas New York law customarily permits representations and buyers place greater reliance on the text of warranties and representations.

W&I / RWI Insurance and its Impact on Drafting

Warranty & Indemnity (W&I) insurance (or Representation & Warranty Insurance (RWI) in US terminology) influences drafting culture differently.

In English law transactions:

• W&I is deeply embedded in mid-market and private equity-led deals
• Recourse against sellers is often materially reduced in W&I transactions
• Insurers influence due diligence scope and disclosure standards

In New York law transactions:

• RWI is also very common, particularly in private equity transactions, but often exists alongside moderate recourse against the sellers
• Insurers frequently expect more extensive representations rather than narrower insured warranties. RWI insurers prefer this because it gives them a full map of potential exposures, allowing them to assess high-risk areas and price the policy accordingly
• The insurance process tends to be slower than in English law transactions

The consequence is that English-law SPAs with W&I often narrow seller liability in reliance on disclosure and insurance, whereas New York law SPAs with RWI retain broader representations and seller liability, even where insurance is present.

Sandbagging, Knowledge and Materiality Scrapes

Negotiation dynamics regarding post-completion recovery also differ.

Under English law:

• Express “anti-sandbagging” positions are more common (i.e. the buyer cannot claim for matters it knew pre-completion)
• Knowledge qualifiers to the warranties may be tied to a defined buyer team
• What constitutes “fair disclosure” standards (e.g. clarity and sufficiency of detail) are frequently heavily negotiated

Under New York law:

• “Pro-sandbagging” clauses are more common, allowing claims even where the buyer had knowledge
• Knowledge qualifiers are more heavily negotiated, particularly in sponsor-led deals
• Materiality scrapes are often used to disregard materiality thresholds in representations and warranties when calculating loss

The net effect is that recoverability risk in English law is more disclosure-driven, whereas in New York law it is more dependent on contractual drafting of representations and warranties, and sandbagging provisions.

Pricing Mechanics: Locked Box vs Completion Accounts

Price-adjustment methodology is another point of difference.

Under English law:

• Both completion accounts (post-closing adjustments address working capital, debt and cash variances) and locked-box pricing mechanisms are widely used (economic risk transfers at a historical balance sheet date)

Under New York law:

• Completion accounts remain the dominant approach, with locked-box structures still relatively uncommon

The commercial impact is significant: English-law transactions tend to favour price certainty and pre-signing financial diligence, while New York law transactions are more tolerant to post-completion adjustments.

Conditionality, MAC and Execution Risk

Execution risk is treated more conservatively in English-law practice.

In English law SPAs:

• Conditionality is typically narrow
• Financing conditions are less common
• Material adverse change (“MAC”) clauses are used sparingly and drafted narrowly

In New York law SPAs:

• Broader conditionality and financing negotiation is more common
• MAC provisions tend to be more expansive (albeit still difficult to enforce in practice)
• Timetables are more flexible around conditions and financing mechanics

The result is a different deal-process culture: English-law transactions tend to have reduced tolerance for conditional risk.

Interim Covenants, Bring-Downs and Termination Mechanics

Both systems rely on interim period governance, but emphasis varies.

English law SPAs typically emphasise:

• Narrow interim operating covenants
• Bring-down (or repetition) of warranties at completion, where agreed
• Narrow termination mechanics

New York law SPAs more often feature:

• Broad interim operating covenants
• Bring-down of representations and warranties is typically supported by certificate-based completion, evidenced through a certificate delivered at completion (often called a “bring-down certificate” or “closing certificate”)
• Break-fee and reverse break-fee mechanics on termination, particularly in private equity transactions

These differences link closely to the differing acceptance of conditionality and completion flexibility across the two jurisdictions.

Dispute Resolution and Governing Law

Finally, dispute resolution differs as follows:

Under English law:

• English courts are the most common dispute resolution forum with arbitration (such as LCIA arbitration) less common

Under New York law:

• Arbitration (such as AAA/JAMS arbitration) is a very common dispute resolution forum (particularly in private equity transactions) with New York courts also common

Key Takeaways

• English-law SPAs are typically disclosure-driven, with narrower warranties qualified by detailed disclosure letters and limited sandbagging, less tolerance for conditional risk, with less formal bring-down mechanics.
• By contrast, New York-law SPAs are representations and warranties driven, featuring broader and more detailed representations and warranties and pro-sandbagging clauses, more tolerance for conditional risk, and formal certificate-based bring-downs at completion. 
• A rudimentary understanding of these differences will give investors who regularly engage in cross-border transactions an edge as they are likely to encounter both governing laws in their deal activity.  

‍