When is a corporation’s breach of warranty fraudulent?

13/05/26

Judgment was recently handed down in Veranova Bidco LP v Johnson Matthey Plc [2026] EWHC 1021.

The case concerned the sale by Johnson Matthey Plc of its health business pursuant to a Sale and Purchase Agreement executed in December 2021. Shortly before execution of the SPA, the health business received a notification from a major customer pursuant to a price-match clause in their supply contract that they had received an offer from a third party to supply buprenorphine hydrochloride – the flagship API product of the health business – at half the price the health business was supplying it and asking the health business to match it.

Dias J found for the Claimant that the existence of this offer was not fairly disclosed under the SPA and constituted a breach of a warranty that the health business was not “currently renegotiating any material term of any Key Contract, which upon conclusion, would have an adverse or detrimental effect on the Businesses.”

The SPA contained clauses limiting the seller’s liability for breach of warranty and barring the purchaser’s claims under a W&I policy except in the case a breach of warranty arising out of fraud, on which the Claimant relied. The Claimant argued that in a case where the warranty was given by a company in an SPA, its breach would be fraudulent if the company (through a relevant officer) knew the facts that made the warranty false. Dias J disagreed and held that it was necessary for the Claimant to prove the individual fraud of a natural person. On the facts, although the Chief Executive did know the facts that made the warranty false, it was held that no individual officer of the company was personally dishonest.

Dias J thus dismissed the claim, but gave permission to appeal on the question of law as to what a claimant needs to show to establish that a breach of warranty by a corporate defendant is fraudulent. Dias J held this was “an important issue with significance extending well beyond this case on which there is no clear authority.” Watch this space!

The judgment is here.