A limitation moratorium agreement is a legal agreement between two parties that restricts one or both parties from pursuing legal claims against each other during a specified period. This type of agreement is commonly used in mergers and acquisitions, where the parties involved want to limit the exposure to potential legal claims that may arise as a result of the transaction.

The purpose of a limitation moratorium agreement is to provide a period of time for the parties to conduct due diligence on each other without fear of legal action. During this time, the parties can investigate each other`s assets, liabilities, contracts, and other relevant information to ensure that the deal is beneficial for both parties.

The duration of the limitation moratorium agreement can vary depending on the nature of the transaction and the level of due diligence required. Typically, the agreement lasts between 30 and 90 days, although it can be longer or shorter depending on the circumstances.

It is important to note that a limitation moratorium agreement does not prevent either party from pursuing legal claims that arise from fraudulent or criminal activities. The agreement only restricts claims that arise from ordinary business activities or events that occurred prior to the execution of the agreement.

In addition to limiting legal exposure, a limitation moratorium agreement can also provide other benefits to the parties involved. For example, it can help to streamline the due diligence process, as the parties may be more willing to share information knowing that they are protected from legal action.

Overall, a limitation moratorium agreement is a useful tool for managing legal risk in mergers and acquisitions. By providing a period of time for due diligence, it allows the parties to make informed decisions about the transaction without fear of legal action. If you are considering a merger or acquisition, you may want to consider including a limitation moratorium agreement in your negotiations.