Representations and indemnities to survive delivery: Overview, definition, and example
What are representations and indemnities to survive delivery?
"Representations and indemnities to survive delivery" refers to the legal provisions in a contract that ensure certain statements (representations) made by the parties, and promises (indemnities) made to protect against certain risks, continue to be enforceable even after the delivery or execution of the contract. In other words, even after the goods or services are delivered, the parties are still bound by certain representations and indemnities that were made before or during the contract execution.
- Representations are statements or assurances made by one party to another about certain facts, conditions, or circumstances, such as the accuracy of financial statements, the legal standing of a business, or the condition of goods sold.
- Indemnities are promises to compensate or hold harmless the other party from certain liabilities or damages that may arise in the future, even after the contract has been performed or goods have been delivered.
The clause that ensures these representations and indemnities continue to apply after delivery or performance is important to protect parties from potential future liabilities that may only become apparent after the completion of the transaction.
Why is the "survive delivery" provision important?
The "survive delivery" provision is important because it provides ongoing protection for the parties involved in the agreement, even after the performance has been completed. Without this provision, any misrepresentations made during the agreement or unforeseen liabilities could go unaddressed once the delivery or completion of the contract is finalized.
For example, if a seller represents that the goods are free from defects and the buyer receives and accepts the goods, the buyer would typically be bound by the contract after delivery. However, if defects are discovered later, the survival clause ensures that the seller’s representation regarding the condition of the goods can still be enforced, and the buyer can seek remedies.
Understanding representations and indemnities to survive delivery through an example
Imagine a company, XYZ Corp., sells machinery to a client, ABC Ltd. As part of the contract, XYZ Corp. represents that the machinery complies with all relevant safety standards and regulations. The contract includes a "survival clause" stating that this representation will survive the delivery of the machinery.
A few months after delivery, ABC Ltd. discovers that the machinery does not meet certain safety standards and suffers losses as a result. Thanks to the survival clause, XYZ Corp. is still legally obligated to compensate ABC Ltd. for the damages, as the representation about the safety of the machinery continues to apply even after delivery.
In another example, a company, DEF Inc., enters into a contract with a supplier to purchase raw materials. The contract includes an indemnity provision stating that the supplier will indemnify DEF Inc. if the materials cause harm or legal liability. Even after the delivery of the materials, if DEF Inc. faces legal action due to defective materials, the supplier is still responsible for indemnifying DEF Inc. as outlined in the contract.
An example of a "representations and indemnities to survive delivery" clause
Here’s how a "representations and indemnities to survive delivery" clause might appear in a contract:
“The representations and warranties made by each Party in this Agreement, including those related to the condition of the goods and compliance with applicable laws, shall survive the delivery and acceptance of the goods and shall remain in full force and effect for a period of [X] months following delivery. Any indemnities provided by either Party in this Agreement shall also survive delivery and shall remain enforceable in the event of any claims arising thereafter.”
Conclusion
Representations and indemnities that survive delivery are crucial provisions in contracts that ensure the parties remain protected from future risks, damages, or liabilities even after the contract has been performed or goods have been delivered. These provisions provide legal recourse in cases of misrepresentation or unforeseen events that may not become apparent until after delivery.For businesses, including survival clauses in contracts helps safeguard against potential legal and financial risks, providing long-term protection. For individuals or parties entering into agreements, understanding these provisions is key to ensuring that their rights and interests are preserved even after the completion of the contract or delivery of goods.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.