The Court of Milan, with reference to the purchase of shares of a general partnership, has recently addressed the question of the mistake on the value of the share.

These are the facts:

  • a contract of purchase of shares of a general partnership is concluded;
  • the seller asks for and obtains an injunction for the payment of the price;
  • the buyer opposes the injunction and, as a counterclaim, asks the annulment of the contract, on the ground that it was concluded by an essential mistake, pursuant to art. 1429, para. 1 n. 2 of the Italian civil code: the seller maintains, in particular, that he decided to buy the shares after the seller showed him several documents (the so-called “informal balances”), with which the seller told the buyer than the company had a series of clients and an economic value, that did not correspond to the real situation of the company;
  • the seller appeared before the court and asked the Judge to confirm the injunction and to reject the buyer’s claims: an important point is that no guarantee was ever given with reference to the value of the share sold.

In light of the above, the Court has had to decide if the mistake on the company assets of a general partnership (or, in any case, on the value, and therefore on the quality, of a company share) can be qualified as an “essential mistake” pursuant to art. 1429, para. 1 n. 2 of the Italian civil code.

The answer was negative.

The Court decided, in fact, that the seller had not given the buyer “any guarantee on the quality of the assets part of the company, nor in relation to the capital solidity of the same”.

With the examined ruling, the Court of Milan has aligned itself with the Supreme Court case-law (cf. Supreme Court ruling of July 19, 2007, n. 16031, quoted in the reasoning of the judgment, even if the ruling relates to the sales of shares of a company limited by shares), according to which the purchase of shares has, as an immediate object of the contract, the partnership itself. The corresponding quota of the corporate assets is only a mediate object, with the consequence that the annulment (on the ground of an essential error) or the resolution of the agreement (due to the lack of a quality of the object of the contract) can be normally asked only if an express guarantee on the value of the assets and their quality has been given.