In the first episode of Mad Men, Don Draper and his team are looking for a way to distinguish Lucky Strike from all the other cigarettes on the market, in the wake of a Reader's Digest report that smoking causes cancer. The problem is that there's really no difference between the brands; they'll all make you sick. That is not the case in deciding whether a post-closing dispute is a purchase price adjustment or a contractual indemnity claim. In this context, the difference can be consequential.
If your client brings you a dispute arising from the acquisition of a private company, chances are good that the acquisition agreement contains a special dispute resolution procedure for purchase price adjustments, referring such disputes to arbitration before an independent accountant. But before you assume the dispute must be arbitrated, remember that the famous presumption in favor of arbitration applies in full force only when an arbitration clause is broad. Purchase price dispute resolution clauses are by nature narrow. They often appear alongside an exclusive-remedy provision specifying litigation for indemnification claims, including claims for breach of representation and warranty. What falls in or out of the purchase price dispute resolution clause may depend largely on how the dispute is framed. This article explores some of the issues to consider before summoning your inner Draper and casting a claim as one for adjustment or breach.