M&A Glossary

A Double Materiality Scrape is a clause in a purchase agreement that states that when determining (a) whether any given representation or warranty in a purchase agreement is accurate or inaccurate (a breach of the representation or warranty), or (b) the amount of losses resulting from a breach of the representation or warranty, any “materiality” or Material Adverse Effect (“MAE”) qualifiers in the representations and warranties will be disregarded (“scrapped”) for indemnification purposes.  A Double Materiality Scrape is very favorable to the Buyer in a purchase transaction.