Representations and Warranties (Reps & Warranties)

Definition

Statements of fact and assurances made by the seller (and sometimes the buyer) in an M&A sale and purchase agreement regarding the condition, operations, finances, and legal standing of the target business. Warranties cover areas including financial statements, material contracts, intellectual property ownership, litigation, tax compliance, and employee matters. Breach of a warranty gives rise to a claim for damages, subject to contractual limitations including time limits, monetary thresholds (baskets and caps), and specific exclusions.