Checklist for Reading a Double Materiality Scrape against a Damages-Only Scrape

On a share purchase agreement under the law of England and Wales, label the indemnity scrape by which leg the words cover, not by the heading. If the words delete “material” and “Material Adverse Effect” both when a Warranty is untrue and when you calculate Loss, the label is double. If the deletion is only for calculating Loss, and not for whether a breach occurred, the label is damages-only. Leave the numeric threshold, the closing MAC, and the flat title warranty outside.

The words name the breach question, the loss calculation, or both. A heading that says “single” is not the test. Work through the draft below before anyone signs.

Disclaimer: Checkory provides AI support, not legal advice. Consult a qualified lawyer for binding decisions.

Why does the heading fail to settle the label?

Clause 9.2 is headed “Single materiality scrape”, but the body deletes “material” and “Material Adverse Effect” both for the breach and for Loss, so the label is double. Call it damages-only when the deletion covers only the calculation of Loss. The heading is not the test.

A typical mistake is to stop at that heading. Goulston & Storrs (28 May 2024) uses “single” for a breach-only scrape and again for a damages-only compromise found in only about 30% of reported transactions. That figure is from a US private-target note, not English law, and not a reason to rewrite clause 9.2. ABA Business Law Today (20 April 2023) calls both legs a double scrape, and says you will not usually see a breach-only scrape on its own.

Why does a double label read the qualifier out of both legs?

On a double label, ignore “material” when you ask if the warranty is untrue and again when you add up Loss. Warranty 4.6 says there is no material litigation. For the undisclosed £6,800 supplier claim, read the warranty without that word. Do not decide, as a matter of law, that £6,800 is material.

That ABA summary reads “no material litigation” as no litigation once both legs are scraped, and recovery still depends on the basket. Do not copy that summary’s figures onto this draft. The £6,800 can be a breach and still produce no payment on its own.

Why does a damages-only label keep materiality on the breach?

A damages-only label keeps “material” on the breach and drops it only for a loss already found. The replacement must be for the sole purpose of calculating Loss, not for whether a breach occurred. On warranty 4.6, an immaterial inaccuracy is then not a Warranty Claim. The £6,800 is not included in the Loss.

ABA’s drafting summary (20 April 2023) says that sole-purpose phrase is what makes it a damages scrape, and the parenthetical confirms there is no breach scrape. Keep that parenthetical. Carscallen (13 November 2020) treats a knowledge scrape as a different deletion: it applies to the breach, not to the damages. Leave any knowledge qualifier in the warranty.

Which lines stay outside the deletion?

Three lines stay outside clause 9.2. Warranty 4.8 tests annual payments above £25,000, other than those listed. That figure is a number, not the word “material”. Vela Wood’s double sample keeps specific monetary thresholds outside the deletion. Leave the £25,000 where the parties wrote it.

Clause 6.1 is a closing condition: Warranties true in all material respects, and no Material Adverse Change as defined in clause 1.1. Goulston treats it as separate from the indemnity breach test. Mayer Brown (11 February 2026) says to carve the no-MAE bring-down out of the scrape. Whether that condition is engaged is a separate question, covered in the MAC closing-condition guide.

A Delaware Superior Court opinion is not English law, and it is not a reason to rewrite clause 6.1. The court said that deleting a defined term without inserting the definition left an absence-of-changes sentence nonsensical. Leave “Material Adverse Change” as the draft defines it.

Baker McKenzie’s UK page says title warranties are often given as absolutely true. On that page, “double materiality is usually avoided” means a qualification in the bring-down and again in the warranty, which is not a reason to relabel clause 9.2. Warranty 3.1 has no “material”, so do not add one because a note says to treat it the same way.

Why does the basket stay in its own row?

The scrape reads out a word. The basket is the aggregate floor. Clause 9.3 says the sellers are not liable unless the aggregate exceeds £40,000, in which case they are liable only for the excess.

Goulston calls qualifiers plus a basket a further hurdle. Fasken (9 April 2026) says a flat representation makes the separate basket question matter more. The choice of recovery sentence belongs in the basket guide, not in clause 9.2. The £6,800 can be a breach and still produce no payment, because it does not clear £40,000. A note that the basket already does the work of “material” is not a reading of clause 9.2.

Which sentence stays on the log?

Settle the marked log before Thursday 5 November 2026. Keep the double words and rely on the £40,000 excess-only basket, or replace the sentence so the deletion is only for calculating Loss. Either choice leaves the £25,000, clause 6.1, and warranty 3.1 where they are.

A study percentage does not choose the sentence. Goulston’s note of 6 May 2026 says a scrape was present in 87% of 139 agreements. That figure does not choose clause 9.2. In practice, record the label, then both legs or the breach leg only, then the basket, then the three lines left outside, then the sentence that stays. Check the operative words before you sign.