What It Does
A representations and warranties clause is a set of factual statements the parties make about themselves, the subject of the deal, and their authority to enter it. A representation is a statement of present or past fact that induces the other party to sign, and a warranty is a promise that the fact is true. Together they allocate risk, because if a statement is false the relying party can claim breach and, in many deals, indemnification. Reps are often qualified by knowledge and materiality, and in M&A they are brought down to the closing date as a condition to closing.
States facts each party relies on, such as authority, ownership, compliance, and the absence of litigation
Converts those facts into promises the other party can sue on if they prove untrue
Allocates risk by assigning who stands behind which facts
Anchors indemnification, since a breached rep is the most common indemnity trigger
Gets qualified by knowledge and materiality, and in M&A is brought down to closing
Representation and warranty insurance has made the scope and survival of reps a central negotiation point in mid-market M&A.
When You'll See It
Representations and warranties appear in nearly every substantive contract: M&A purchase agreements, financing and credit agreements, SaaS and license agreements, supply contracts, and employment and equity documents. In commercial deals they run a few mutual reps on authority and enforceability; in M&A they expand into pages of seller reps backed by disclosure schedules. They are most heavily negotiated in M&A, where the seller’s reps and their survival period drive the indemnity.
It matters most where one side is buying something it cannot fully verify, such as a business, a portfolio, or a software platform. The less you can confirm in diligence, the more weight the reps carry.
Examples
Regeneron Pharmaceuticals, Inc.
Sanofi, Fifth Amendment to License and Collaboration Agreement
Mutual + organization and authority
Mutual
2022
"Each party represents and warrants to the other Party, as of the Effective Date, as follows: (a) it is duly organized and validly existing under the Laws of its jurisdiction of incorporation; (b) it has full corporate power and authority and has taken all corporate action necessary to enter into this Fifth Amendment[…]"
Fate Therapeutics, Inc.
Ono Pharmaceutical Co., Ltd., Amendment
Mutual + enforceability
Mutual
2022
"Each Party represents and warrants to the other Party as of the execution of this Amendment, that (i) such Party has taken all necessary action on its part required to authorize the execution and delivery of this Amendment and the performance of its obligations hereunder, and this Amendment constitutes a legal, valid and binding obligation of such Party that is enforceable against it in accordance with the terms[…]"
SmartRent, Inc.
Kristen Lee, First Amendment to Employment Agreement
Mutual + authority to sign
Mutual
2024
"Each party represents and warrants to the other party that (i) it has the authority to enter into this Amendment and to grant the rights contained herein, and (ii) the person signing this Amendment is authorized to sign on behalf of that party."
US Farms & Mining, Inc.
CSRE Properties Tennessee, LLC (CleanSpark), Real Estate Purchase and Sale Agreement
One-sided (Seller) + materiality bring-down
One-Sided
2024
"Accuracy of Seller’s Representations and Warranties. All of Seller’s representations and warranties contained in or made pursuant to this Agreement shall be true and correct in all material respects as of the Closing Date."
Advanced Micro Devices, Inc.
Underwriters, Underwriting Agreement (Senior Notes)
Knowledge-qualified + IP and no-litigation
2025
"[…] (i) to the knowledge of the Company, there is no material infringement by third parties of any such Intellectual Property; (ii) to the knowledge of the Company, there is no pending or threatened action, suit, proceeding or claim by others challenging the rights of the Company or any of its subsidiaries in or to any such Intellectual Property[…]"
Point Energy Partners Petroleum, LLC
Vital Energy, Inc., Purchase and Sale Agreement
No-other-representations disclaimer
2024
"[…] as to the accuracy as of the Closing Date of the representations and warranties of Seller set forth in this Article 4, (i) Seller makes no other representations or warranties, express or implied, and (ii) Seller expressly disclaims all liability and responsibility for any representation, warranty, statement[…]"
Negotiate
Buyer or customer
Get broad, unqualified reps on the facts that matter most, such as title, IP ownership, and compliance.
Resist sweeping knowledge and materiality qualifiers that hollow out the reps.
Require a bring-down of the reps to the closing date as a condition to close.
Tie a rep breach directly to indemnification with a workable survival period.
Add a full-disclosure or no-misstatement rep where the facts warrant it.
Seller or vendor
Qualify reps by knowledge and materiality wherever defensible.
Use the disclosure schedules to carve out known exceptions.
Shorten the survival period so stale reps cannot be claimed years later.
Add a no-other-representations disclaimer to block reliance on anything outside the contract.
Cap rep-and-warranty indemnity with a basket and a ceiling.
Every qualifier is a risk shift. Track where the facts move from one side to the other.
Red Flags
Sweeping knowledge and materiality qualifiers that turn firm facts into near-meaningless statements.
Reps with no survival period or an extremely short one, leaving no time to discover a breach.
A no-other-representations disclaimer paired with thin contractual reps, which narrows your recourse.
Reps decoupled from indemnification, so a false statement carries no clear remedy.
Disclosure schedules that swallow the reps with broad, vague exceptions.
FAQs
This content is for informational purposes only and does not constitute legal advice.
