Representations complete: Overview, definition and example
What are representations complete?
Representations complete refers to the concept that all statements, assertions, or guarantees made by a party in an agreement or contract are full, accurate, and final, without any omissions or conditions. This term indicates that the party making the representations has disclosed all relevant information and has not left out any material facts that could affect the agreement or the other party's decision-making. When a contract or agreement includes a clause stating that "representations are complete," it affirms that the representations made are exhaustive, ensuring that no additional disclosures or corrections are necessary to make the agreement valid.
For example, in a business sale agreement, the seller may make representations about the condition of the business, its financial status, and its legal compliance, with the understanding that these representations are complete and cover all relevant aspects of the transaction.
Why are representations complete important?
Representations complete are important because they establish clarity and certainty in a contract, ensuring that both parties are working with all necessary and accurate information. This concept protects both the buyer and seller by making it clear that there are no additional facts or material information that should have been disclosed. It minimizes the potential for disputes or misunderstandings by requiring the parties to disclose everything relevant upfront.
For businesses, complete representations help avoid future legal disputes related to misrepresentation, fraud, or omission of key details. It ensures that decisions made during the contract negotiation and execution are based on all available and truthful information. For individuals, it offers peace of mind that they are entering an agreement based on a full and accurate understanding of the relevant facts.
Understanding representations complete through an example
In the sale of a property, the seller may make representations about the condition of the building, such as the fact that it is free from structural issues and complies with local building codes. A clause stating that the representations are complete means that the seller has fully disclosed all issues, and the buyer cannot later claim that the seller failed to disclose an important defect that was relevant to the transaction. If an issue arises later, the buyer could not argue that the seller had not provided complete representations.
In another example, a company selling its business makes representations about its financial health, legal standing, and intellectual property. The seller includes a clause stating that the representations are complete, meaning that the buyer cannot claim that any material facts were omitted during the sale. If the company later faces undisclosed liabilities, the buyer may have legal grounds to seek remedies based on the incomplete representations.
An example of representations complete clause
Here’s how this type of clause might appear in a contract:
“The Seller represents and warrants that all statements made in this Agreement, including any representations regarding the financial status, legal compliance, and condition of the assets, are complete and accurate. The Seller confirms that no material information has been omitted that could affect the Buyer’s decision to proceed with this transaction. The Seller acknowledges that the Buyer is relying on the completeness of these representations in entering into this Agreement.”
Conclusion
Representations complete ensures that all statements or guarantees made by a party in a contract are thorough, accurate, and final, with no critical information left out. This concept provides clarity and certainty in agreements, protecting both parties from future claims of misrepresentation or omission. Whether in a real estate transaction, business sale, or other contractual arrangements, ensuring that representations are complete helps avoid misunderstandings and ensures the integrity of the agreement.
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.