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When acquiring a company, the buyer often conducts extensive research and asks questions. A buyer naturally wants to avoid buying a pig in a poke. If it turns out afterwards that things are not as rosy as presented by the seller, the buyer may try to recover their damages – usually an overpaid purchase price – from the seller. This was also attempted by the buyer of a webshop who accused the seller of not telling the truth about the number of Instagram followers.
This case was brought before the Court of Appeal in 's-Hertogenbosch. The company in question was a webshop for sportswear and other sports items. These were sold, among other things, via the webshop's Instagram page. After the acquisition, the buyer quickly sent an angry letter claiming that there were 'bought' Instagram followers. These followers, of course, did not buy any products from the webshop. The buyer stated that the number of Instagram followers was of great importance to them and that the seller should have informed them that there were a large number of bought followers.
The court appointed an expert to investigate whether there were indeed bought followers or 'bots'. However, the expert could not find any evidence of this. The seller did use the tool Instaranker, but it did not offer the possibility to buy followers. The court therefore dismissed the claim.
The buyer did not give up and appealed. But even on appeal, the outcome was not favorable for them. Their objections to the expert report were dismissed. It was not proven that there was a significant number of bought Instagram followers. Additionally, the Court of Appeal ruled that the seller did not have to disclose the use of the Instaranker tool. If this was indeed important to the buyer, they should have asked questions about it. They did not. It was established that prior to the acquisition, the seller had provided access to the company's administration and customer base. Nothing indicated that the number of Instagram followers was important to the buyer. The Court of Appeal therefore concluded that the seller had not withheld any essential information or made any false statements. The buyer's claims were dismissed.
Although in general the seller's duty to inform weighs more heavily than the buyer's duty to investigate, this ruling emphasizes once again that a buyer must clearly indicate which information is important to them. If they do not, they cannot complain afterwards that the seller did not inform them about it.
Do you have questions about this topic? Contact Sonja Geldermans, Corporate Law Attorney.
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