Representations cover corporate authority, financial statements, contracts, litigation, compliance, employees, intellectual property, and taxes. Breach supports indemnification and in some cases termination before closing.
Qualifiers by knowledge and materiality limit their scope.
Alternative Names:
Reps and Warranties|R&W
Why it Matters?
Qualifiers determine what the representations actually promise, and a compliance representation qualified by knowledge and materiality covers substantially less than an unqualified one. Negotiating those qualifiers is where risk allocation occurs, often more than in the indemnification caps. Disclosure schedules then carve out known exceptions, which is why reading the representations without the schedules gives a misleading picture of the protection.
Frequently Confused with
Related terms
Frequently asked questions
What determines the scope of a representation?
Why read the disclosure schedules?
