What's in a rep - how reps and warranties work to protect the acquirer.

This article provides a good explanation on the definition of representations and warranties at the end of the first section, and their use in protecting an asset or share purchaser. The article also describes the due diligence process, and describes the types of clauses that can be included for the protection of the buyer.

Specific exceptions to representations are generally contained in the schedules to the agreement. Vendors can use this drafting mechanism to ensure that their representations are accurate, thus increasing the likelihood that they will receive the full benefit of what they have bargained for. Purchasers need to pay close attention to the schedules to ensure that they are receiving what they expected to purchase, and to determine how to focus their due diligence efforts.

Read the article here.

Takeaway:

  • Parties must pay close attention to the schedules to determine whether the details of the deal have been accurately recorded.

Written by Rajah. Rajah Lehal is Founder and CEO of Clausehound.com. Rajah is a legal technologist and technology lawyer who is, together with the Clausehound team, capturing and sharing lawyer expertise, building deal negotiation libraries, teaching negotiation in classrooms, and automating negotiation with software.