Practice Area


Published On

November 28, 2022


Sucharita Basu , Soumya Banerjee , Kritika Sethi


A Share Purchase agreement is an agreement entered into between parties for sale of shares of a company. The same contains clauses governing the purchase and sale of shares by the purchaser from the seller. The same contains several conditions precedents, i.e. pre-requisites which have to be fulfilled before the shares are transferred. Accordingly, it contains clauses which allows parties to terminate the same either at the happening of a certain event (breach of the contract by either of the two parties, nonfulfillment of a condition precedent etc.) or without any breach of the contract. Execution of a Share Purchase Agreement happens pursuant to identification of the target company, due diligence, including legal due diligence, is undertaken by the purchaser, reaching an agreement on the purchase price etc. All these steps involve incurring substantial efforts and costs on the part of the purchaser in light of the commercial interest in the transaction. A purchaser is interested in the consummation of the transaction in light of the commercial gains in the future. A seller is interested in consummation of the transaction for the value that would be added to the enterprise pursuant to the induction of the purchaser in the company. These interests would be invaluably hindered if the parties only have an option of claiming damages in case of termination of an agreement by the other party. Accordingly, specific performance of such an agreement assumes significance as it ensures that the parties to a transaction perform their obligations agreed under it.