Representations and warranties of the vendor: Overview, definition, and example
What is representations and warranties of the vendor?
Representations and warranties of the vendor are the promises and statements a seller (the “vendor”) makes about a business, product, or asset as part of a sale. These are built into the contract and cover things like ownership, financial condition, legal compliance, and whether there are any hidden problems.
In simple terms, it’s the vendor saying, “Here’s what I’m telling you is true about what I’m selling,” and agreeing to be held accountable if those statements turn out to be false.
Why is representations and warranties of the vendor important?
When you're buying a business, property, or even a batch of products, you need to know exactly what you're getting. Representations and warranties give buyers a level of trust and legal protection by putting the vendor’s claims in writing.
If any of those claims turn out to be false—like if the business has hidden debts or the product doesn’t meet standards—the buyer may be able to cancel the deal, ask for a price adjustment, or even sue for damages. It’s a key tool for reducing risk in any transaction.
For vendors, it’s also important to make these statements carefully and truthfully—because once they’re in the contract, you’re legally on the hook for them.
Understanding representations and warranties of the vendor through an example
Imagine you're buying a small e-commerce business. The seller includes several representations and warranties in the contract: that they own the business outright, that all customer data was collected legally, that there are no ongoing lawsuits, and that the financial statements are accurate.
Six months after the sale, you discover that the business is being sued for violating data privacy laws, and the seller never disclosed it. Because they gave a written warranty saying there were “no pending legal actions,” you now have grounds to seek compensation.That’s how these representations and warranties work—they create legal accountability for what the seller claims.
An example of a representations and warranties of the vendor clause
Here’s how this clause might appear in a sale agreement:
“The Vendor represents and warrants that: (a) it has good and marketable title to the Assets, free and clear of all liens and encumbrances; (b) the financial statements provided are true, complete, and fairly represent the financial condition of the Business; and (c) there are no legal proceedings pending or threatened against the Business.”
Conclusion
Representations and warranties of the vendor are a cornerstone of any sale or purchase agreement. They give the buyer peace of mind that the seller is being upfront—and provide legal recourse if something goes wrong.
If you're selling, make sure your statements are accurate and supported by facts. If you're buying, review these clauses carefully—they could be the difference between a smooth deal and a costly mistake. Either way, they help keep both parties honest and accountable.
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.