When acquiring a limited company, situations can arise where the prerequisites of both invalidity, under the Swedish Contracts Act, and cancellation, under the Swedish Sale of Goods Act, are met. The question then arises whether the party has an option which regulation they wish to use in order to seek damages for the wrong he believes has been committed. Can an applicant party choose between the two different claims or is it pre-determined?

The question may seem to be of marginal importance as they can be seen as two very similar regulations. However, the choice could result in substantial differences in damages. The cancellation regulation generally reward positive contractual liability, while the invalidity regulation, through law of tort, only intends to replace the negative interest. Depending on how the negotiations and the acquisition has proceeded, the different principals of liability can offer fundamentally different compensation.

It has historically been argued that parties should not be allowed to choose between claims based solely on the basis that one is more profitable than the other. The author, however, concludes that, in cases where there is a choice between the regulations, it always exists such a fraudulent behavior by the defendant that there is no reason for the legal system to protect them by restricting the aggrieved party’s compensation claim.