Present: All the Justices 

INDUSTRIAL ALLOY 

FABRICATORS, INC., ET AL. 

 OPINION BY 

v. Record No. 981093 CHIEF JUSTICE HARRY L. CARRICO 

 April 16, 1999 

WILLIAMS INDUSTRIES, INC., ET AL. 

FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND 

Melvin R. Hughes, Jr., Judge 

 This is an indemnification and warranty case involving the 

purchase of corporate assets by Industrial Alloy Fabricators, 

Inc. (Industrial Alloy) and Precision Components Corporation 

(Precision Components) from Williams Industries, Inc. (Williams 

Industries) and IAF Transfer Corporation (IAF Transfer). From a 

judgment in favor of Williams Industries and IAF Transfer, we 

awarded Industrial Alloy and Precision Components this appeal. 

 Industrial Alloy is a Pennsylvania corporation with its 

principal place of business in Richmond, Virginia. At all 

relevant times, it has been engaged in the business of providing 

customers with design and production of custom pressure vessels, 

tanks, reactors, distillation columns, and other process 

equipment. Precision Components, which is also a Pennsylvania 

corporation, is “the majority holder” of Industrial Alloy. 

Precision Components’ principal place of business is in York, 

Pennsylvania. 

 Williams Industries is a Virginia corporation with its 

principal place of business in Fairfax County. IAF Transfer is 
also a Virginia corporation based in Fairfax County, and it is 

the wholly owned subsidiary of Williams Industries. IAF 

Transfer formerly was known as Industrial Alloy Fabricators, 

Inc. (a Virginia corporation), but changed its official 

corporate name to IAF Transfer Corporation (a Virginia 

corporation) about the time the parties entered into an “Asset 

Purchase Agreement” (the Agreement), which is at the heart of 

the present controversy. 

 The Agreement is dated October 31, 1994. Pursuant to its 

terms, Precision Components and Industrial Alloy (the Buyers) 

agreed to purchase for $3,600,000 all the assets, including the 

corporate name, of the former Industrial Alloy Fabricators, Inc. 

from IAF Transfer and Williams Industries (the Sellers). The 

Agreement provided that it was to be governed by and construed 

in accordance with the laws of the Commonwealth of Pennsylvania. 

 In § 9.1 of the Agreement, the Sellers agreed to indemnify 

the Buyers “against and in respect of, any and all claims, 

damages, actions, judgments, losses, liabilities, and expenses, 

including reasonable fees and disbursements of counsel, incurred 

by [the Buyers] arising from or in connection with . . . (a) all 

Liabilities of [the Sellers], whether accrued, absolute, fixed, 

contingent or otherwise, other than Assumed Liabilities.” The 

Sellers further agreed in § 9.1(b) to indemnify the Buyers 

against “any breach of any covenant or obligation of [the 

2
Sellers] incurred under this Agreement, or because any 

representation or warranty by [the Sellers] contained herein 

. . . shall be false or misleading.” 

 In § 2.2 of the Agreement, the Buyers assumed certain 

liabilities shown on an October 31, 1994 balance sheet as well 

as liabilities or obligations arising under certain contracts. 

Section 2.1 provided, however, that, except for the assumed 

liabilities, the Buyers would not be “liable for any debt, 

claim, responsibility, damages, fines, penalties, costs, 

expenses, liability or obligation of [the Sellers] . . . whether 

disclosed or undisclosed . . . fixed or contingent [and] whether 

due or to become due.” 

 Section 6.14 of the Agreement provided that the Sellers 

shall comply with the provisions of the Virginia Bulk Sales 

Act, Code §§ 8.6-101 through -111, “in connection with this sale 

of assets.”1 In this section of the Agreement, the Sellers also 

warranted that “there are no creditors of any type or nature 

which have not specifically been disclosed by identity and 

amount” to the Buyers. 

 Section 9.3 of the Agreement required the “Indemnified 

Party” to notify the “Indemnifying Party” by registered mail 

 

1

 The Code sections formerly comprising the Bulk Sales Act, 

§§ 8.6-101 through –111, were repealed in 1997 and replaced by 

Code §§ 8.6A-101 through -110. 1997 Va. Acts ch. 121. Because 

3
whenever any claim for indemnification arises under the 

Agreement. Section 9.4 gives the “Indemnifying Party” the right 

to participate in the defense of any claim or demand by any 

third party against the “Indemnified Party.” And § 9.5 provided 

that “the Indemnified Party shall make no settlement of any 

claim that would give rise to liability on the part of the 

Indemnifying Party under an indemnity contained in this Section 

9 without the written consent of the Indemnifying Party.” 

(Emphasis added.) 

 At the time the parties entered into the Agreement in 

October 1994, there was pending in the United States District 

Court for the Middle District of North Carolina a products 

liability action which had been initiated on March 31, 1994, by 

Unitex Chemical Corporation against the former Industrial Alloy 

Fabricators, Inc. Unitex Chemical Corp. v. Industrial Alloy 

Fabricators, Inc., No. 2:94CV00164 (M.D. N.C., Greensboro Div.) 

(the North Carolina litigation). It was stipulated below that 

the Buyers, prior to their purchase of the assets in question, 

received a letter signed by counsel for the Sellers which 

provided a description and analysis of litigation pending 

against the former Industrial Alloy Fabricators, Inc., including 

the North Carolina litigation. It was further stipulated that 

 

this litigation arose prior to the revision, we will cite to the 

previous sections. 

4
the letter was incorporated by reference into the Agreement. 

However, it is undisputed that the claim asserted in the North 

Carolina litigation was not one of the liabilities assumed by 

the Buyers pursuant to § 2.2 of the Agreement. 

 Core States Bank, N.A. (the Bank), had agreed to finance 

the Buyers’ acquisition of the assets, and the Bank wanted to 

protect the collateral that would act as security for the debt. 

Although the Agreement required the Sellers to furnish the 

Buyers a list of the Sellers’ creditors and the Buyers had 

requested such a list, none had been furnished as the date 

approached for closing under the Agreement, and the Bank refused 

to release the funds. As a direct result, the parties and the 

Bank entered into an escrow agreement, which provided for the 

establishment of an escrow account to ensure the Sellers’ 

compliance with the Virginia Bulk Sales Act. Although the 

Sellers believed the Bulk Sales Act did not apply to the 

transaction involved in the Agreement, they acquiesced in and 

agreed to the Buyers’ publication of a notice in the Richmond 

Times-Dispatch of the Buyers’ intent to pay the Sellers’ debts 

in full.2

 

2

 Code § 8.6-103(6) provided an exception to the Bulk Sales Act 

for “[t]ransfers to a person maintaining a known place of 

business in this State who becomes bound to pay the debts of the 

transferor in full and gives public notice of that fact.” 

5
 The notice, prepared by the Buyers’ then counsel, stated 

that a bulk transfer was about to be made by the former 

Industrial Alloy Fabricators, Inc., as the seller, to the new 

Industrial Alloy Fabricators, Inc., as the buyer, and that 

“Buyer has become bound by the terms of a certain agreement 

between it and Seller to pay Seller’s debts in full.” The 

notice appeared in the newspaper on November 3 and 10, 1994. 

The parties then proceeded to close the transaction for the 

asset purchase. 

 On September 18, 1995, Unitex Chemical Corporation, the 

plaintiff in the North Carolina litigation, filed a complaint 

against the Buyers in the United States District Court for the 

Eastern District of Virginia alleging a violation of the Bulk 

Sales Act for the Buyers’ failure to give Unitex notice of the 

asset transfer. Unitex Chemical Corp. v. Industrial Alloy 

Fabricators, Inc., Civil Action No. 3:95CV777 (E.D. Va., 

Richmond Div.) (the Virginia Bulk Sales litigation). In their 

answer filed January 6, 1996, the Buyers responded that they 

“were not required to provide [Unitex notice] because the 

transaction was exempted, pursuant to Virginia Code § 8.6-103.” 

Unitex then sought leave to amend its complaint to seek a 

declaratory judgment that the Buyers had assumed the debts of 

the former Industrial Alloy Fabricators, Inc. by virtue of the 

notice published in the Richmond Times-Dispatch. 

6
 The district court never ruled on Unitex’s motion to amend 

because, on March 20, 1996, the Buyers entered into a 

“Stipulation and Settlement Agreement” with Unitex “to settle 

all claims asserted” in the Virginia Bulk Sales litigation. 

Pursuant to this agreement, Unitex dismissed the Virginia Bulk 

Sales litigation in exchange for the Buyers’ agreement to pay 

any judgment returned for Unitex in the North Carolina 

litigation. 

 The Sellers were aware of the filing of the complaint in 

the Virginia litigation and of the fact that depositions were 

scheduled to be taken in the case. However, the Buyers neither 

gave the Sellers prior notice of the settlement of the 

litigation nor sought their consent to the terms of the 

settlement agreement. 

 The Buyers participated in settlement discussions 

concerning the claim asserted in the North Carolina litigation 

and ultimately contributed $300,000 toward settlement of that 

claim. The parties to the litigation entered into a “Settlement 

Agreement and Mutual Release of All Claims” dated June 10, 1996. 

 The Buyers then made demand upon the Sellers to comply with 

the indemnification provisions of the Agreement. The Sellers 

made no response to the demand, and, on October 3, 1996, the 

Buyers filed in the court below a two-count motion for judgment 

against the Sellers seeking to recover the $300,000 the Buyers 

7
had contributed to settlement of the North Carolina litigation, 

plus attorneys’ fees and costs. 

 In Count I of the motion for judgment, the Buyers alleged a 

breach of warranty by the Sellers for their failure to disclose 

all the creditors of the former Industrial Alloy Fabricators, 

Inc. In Count II, the Buyers sought to enforce the 

indemnification provisions of the Agreement. In their grounds 

of defense, the Sellers responded, inter alia, that they were 

not liable to the Buyers because the sums for which the Buyers 

sought indemnification “were the product of a settlement [of the 

Virginia Bulk Sales litigation] of which [the Sellers] were 

given no advance notice, and to which [the Sellers] did not 

consent.” 

 Both the Buyers and the Sellers filed motions for summary 

judgment. The trial court denied the Buyers’ motion and took 

the Sellers’ motion under advisement. At a bench trial, the 

Sellers contended that the Buyers were not entitled to recover 

because they failed to give notice of, or obtain the Sellers’ 

consent to, the settlement of the Virginia Bulk Sales 

litigation, as required by §§ 9.3 and .5 of the Agreement. The 

Buyers contended that the notice and consent provisions of the 

Agreement were not applicable because the Sellers’ liability to 

indemnify the Buyers did not arise from the settlement of the 

Virginia Bulk Sales litigation. Rather, the Buyers said, the 

8
Sellers’ liability was a preexisting obligation arising from the 

publication in the Richmond Times-Dispatch of the notice whereby 

the Buyers agreed to be bound to pay the Sellers’ obligations in 

full, in which publication the Sellers acquiesced. 

 Upon conclusion of the trial, the court issued a letter 

opinion, which it incorporated into its final order by 

reference. The court rejected the Buyers’ contention that the 

notice and consent provisions of the Agreement were not 

applicable and agreed with the Sellers that the Buyers’ “failure 

to adhere to [the consent requirement of] Section 9.5 of the 

Asset Purchase Agreement will preclude the [Buyers] from 

obtaining indemnification for their contribution to the North 

Carolina litigation.” 

 As noted previously, the Agreement provides that it is to 

be governed by and construed in accordance with the laws of the 

Commonwealth of Pennsylvania. In that Commonwealth, 

“indemnification clauses are generally ‘not favored by the law’ 

and are subject to a strict construction compelling an 

interpretation ‘against the party seeking their protection.’” 

Lackie v. Niagara Mach. & Tool Works, 559 F. Supp. 377, 378 

(E.D.Pa. 1983) (quoting Dilks v. Flohr Chevrolet, Inc., 192 A.2d 

682, 687 (Pa. 1963)); see also Kiewit Eastern Co. v. L & R 

Constr. Co., 44 F.3d 1194, 1202 (3d Cir. 1995) (Pennsylvania law 

9
requires that an indemnity agreement be strictly construed 

against party asserting it.) 

 In the interpretation of a contract, Pennsylvania law 

requires that “‘each and every part of it must be taken into 

consideration and given effect, if possible, and the intention 

of the parties must be ascertained from the entire instrument.’” 

Bethlehem Steel Corp. v. MATX, Inc., 703 A.2d 39, 42 (Pa. Super. 

1997) (quoting Marcinak v. Southeastern Greene School District, 

544 A.2d 1025, 1027 (Pa. Super. 1988)); see also Department of 

Transp. v. Manor Mines, Inc., 565 A.2d 428, 432 (Pa. 1989) (when 

interpreting a contract, court must give effect to all its 

provisions). 

 With respect to indemnification, the common law of 

Pennsylvania requires that “[w]hen a party settles a claim with 

an injured individual, then sues the party primarily responsible 

for the harm for indemnity, the settling party must prove[, 

inter alia,] that proper notice was given to the party from whom 

it seeks indemnity.” Consolidated Rail Corp. v. Youngstown 

Steel Door Co., 695 F. Supp. 1577, 1581 (E.D.Pa. 1988); see also

Tugboat Indian Co. v. A/S Ivarans Rederi, 5 A.2d 153, 156 (Pa. 

1939) (one secondarily liable for injury may recover indemnity 

from one primarily responsible provided he has given proper 

notice). 

10
 On appeal, the Buyers contend, as they contended below, 

that the notice and consent provisions of the Agreement did not 

apply to their settlement of the Virginia Bulk Sales litigation 

because that “settlement did nothing more than recognize an 

obligation previously created [upon the Buyers] by virtue of the 

Bulk Sales Act public notice.” The Buyers state that § 9.5 

requires consent when a settlement “would give rise to liability

on the part of the Indemnifying Party.” They then note that in 

Plymouth Township v. Borough of Larksville, 110 A. 801 (Pa. 

1920), the Pennsylvania Supreme Court defined the term 

“liability” as including “every kind of obligation, even 

obligations that are unascertained or imperfect.” Id. at 802. 

 From this, the Buyers argue that, “even though the monetary 

amount of the obligation to Unitex was unascertained at the time 

of the Agreement, liability still attached to Buyers at the time 

of the Bulk Sales Act public notice in November, 1994,” and that 

it was this event, which had the Sellers’ approval, and not the 

settlement of the Virginia Bulk Sales litigation, which “gave 

rise to the Sellers’ indemnification liability.” Hence, the 

Buyers conclude, the settlement of the Virginia litigation “had 

no legal significance,” and the trial court erred when it 

selected the settlement “as the triggering event.” 

 We disagree with the Buyers’ conclusion. To adopt their 

view would, contrary to Pennsylvania law, require a strict 

11
construction of the indemnification provisions of the Agreement 

against the Sellers, rather than the Buyers, fail to give 

effect to each and every part of the Agreement, deny the Sellers 

the right to prior notice as provided by § 9.3 of the Agreement 

and Pennsylvania common law, and effectively write the consent 

provision of § 9.5 out of the Agreement. 

 Although we express no opinion on the subject, the Buyers 

may be correct in saying, as they say on brief, that upon 

publication of the Bulk Sales notice, they “became 

unconditionally liable to pay the North Carolina product 

liability claim.” However, as the Sellers point out, § 9.5 of 

the Agreement “by its terms is not concerned with the time at 

which the basis of Buyers’ liability . . . arose” but, instead, 

“the event triggering the [Buyers’] obligation to seek and 

obtain the [Sellers’] consent is the [Buyers’] ‘settlement of 

any claim that would give rise to liability on the part of the 

[Sellers] under an indemnity contained in [the Agreement].’” 

 In other words, § 9.5 contemplates that regardless of the 

point in time at which liability may arise against the Buyers 

for a claim within the intendment of the Agreement, it is not 

the attachment of such liability to the Buyers but the 

subsequent settlement of the claim that is decisive. Under the 

terms of § 9.5, not until that time arrives does there exist a 

“settlement . . . that would give rise to liability on the part 

12
of the Indemnifying Party under an indemnity contained in [the 

Agreement].” The settlement of the Virginia Bulk Sales 

litigation was such a settlement, the Sellers’ consent thereto 

was required, and, in the words of the trial court, the Buyers’ 

“failure to [obtain the consent] will preclude [them] from 

obtaining indemnification for their contribution to [settlement 

of] the North Carolina litigation.” 

 The Buyers, however, cite a statement in the trial court’s 

letter opinion that “a liability or debt cannot be ‘preexisting’ if it has yet to be imposed.” The Buyers then argue 

that if the publication of the Bulk Sales notice did not impose 

indemnification liability upon the Sellers then the liability 

was not imposed until the Buyers contributed the $300,000 toward 

settlement of the North Carolina litigation. This settlement, 

the Buyers say, occurred with the Sellers approval, as 

demonstrated by two letters written by the Sellers’ corporate 

counsel shortly before the $300,000 was paid. 

 However, the trial court made the explicit finding that 

“[n]either letter evinces ‘consent’ by the [Sellers] to the 

Virginia settlement nor is it a waiver of the consent 

requirement under the Agreement.” Our reading of the two 

letters satisfies us of the correctness of the trial court’s 

finding. Indeed, the first letter, addressed to the Buyers’ 

counsel, while noting that the addressee earlier had been 

13
authorized to contribute $300,000 toward the effort to settle 

the North Carolina litigation, stated that “[t]here has not been 

any waiver, settlement or other understanding between [the 

Buyers] and [the Sellers] regarding the efforts to settle or 

defend this case, and all rights have been reserved as asserted 

in the various correspondence or otherwise.” 

 The second letter, addressed directly to Precision 

Components, while urging the Buyers to settle the North Carolina 

litigation, stated that “[the Sellers] believe that your 

voluntary assumption of the Unitex claim under [the agreement 

settling the Virginia Bulk Trades litigation], without notice to 

or consent by us, relieves us of any obligation to indemnify you 

for the claim and constitutes a violation of the Asset Purchase 

Agreement.” 

 Finally, the Buyers argue that the trial court erred in 

denying them recovery on the breach of warranty claim alleged in 

Count I of their motion for judgment. The Buyers base this 

claim upon a purported violation by the Sellers of § 6.14 of the 

Agreement, which required the Sellers to furnish the Buyers a 

list of creditors as described by Code § 8.6-104 of the Bulk 

Sales Act and to warrant “that there are no creditors of any 

type or nature which have not specifically been disclosed by 

identity and amount to [the Buyers.]” The Buyers complain that 

the Sellers did not provide them with a list of creditors and 

14
did not specifically disclose all creditors by identity and 

amount. 

 The Buyers assert that the trial court implicitly held that 

the Buyers’ failure to comply with the consent provision of 

§ 9.5 “cut off their breach of warranty claim.” However, we 

find nothing in the trial court’s letter opinion or final order 

to support this argument. Rather, in its letter opinion, the 

trial court adopted the Sellers’ proposed findings of fact and 

conclusions of law. Included was a finding that any failure of 

the Sellers to furnish a list of creditors was not the proximate 

cause of any damage to the Buyers since they had sufficient 

information from “the due diligence performed on [the Sellers]” 

to satisfy “any obligations [the Buyers] had under § 8.6-104 

[and –105] of the [Bulk Sales] Act to send notices to [the 

Sellers’] creditors.” 

 Furthermore, as the Sellers point out, “the only creditor 

of [the former Industrial Alloy Fabricators, Inc.] relevant to 

this litigation is Unitex, and it is undisputed that Sellers 

specifically disclosed to Buyers the existence of Unitex’s 

outstanding claim . . . well in advance of the closing date of 

the asset purchase.” Hence, any discussion of the Sellers’ 

failure to furnish a list of irrelevant creditors would be 

purely academic. 

15
 For the reasons assigned, we will affirm the judgment of 

the trial court. 

Affirmed. 

16