representations and warranties
Definition
Representations and warranties are factual statements and promises one party makes to another in a contract, essentially saying 'everything I've told you about my business, product, or situation is true and accurate.' If any of those statements turn out to be false, the other party can sue you for damages or even cancel the deal entirely.
Example
When you sell your bakery, you might represent and warrant that you own all the equipment free and clear, that your financials are accurate, and that you have no pending lawsuits, and if it turns out you were hiding a tax debt, the buyer can come after you for the money.
Watch Out
Never sign a contract with representations and warranties you cannot fully stand behind, because even an innocent mistake in those statements can make you legally and financially liable.
See which terms appear in your contract?
This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.