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Definition of Disclosure Schedules

In the context of business transactions such as mergers and acquisitions, disclosure schedules are essentially detailed documents attached to a purchase or sale agreement that disclose exceptions to the representations and warranties made by the seller in the agreement.

The purpose of the disclosure schedule is to protect the seller from future liability after the transaction closes. If there are any issues, exceptions, or qualifications to the general statements of fact (representations and warranties) made in the main agreement, the seller will list these in the disclosure schedule. For example, if the agreement states that the seller has no ongoing legal disputes, but there is actually one minor legal dispute, the seller would disclose that dispute in the disclosure schedule.

The disclosure schedules act as a mechanism to provide the buyer with detailed, specific information about the business. By detailing any potential risks or liabilities, they allow the buyer to make a more informed decision about the purchase. If an exception is properly disclosed, the buyer typically cannot bring a claim against the seller for that exception after closing.