Representations of purchaser: Overview, definition, and example
What are representations of purchaser?
Representations of purchaser refer to the statements or assurances made by the buyer in a contract regarding their ability, qualifications, and intentions related to the purchase. These representations are typically included to ensure that the purchaser is truthful and capable of fulfilling their obligations under the contract. They are a way for the seller to confirm that the buyer is legally able and financially ready to proceed with the purchase.
For example, a purchaser might represent that they have the necessary funds to complete the transaction or that they have the authority to enter into the contract.
Why are representations of purchaser important?
Representations of purchaser are important because they provide confidence to the seller that the buyer is legitimate and capable of meeting the terms of the agreement. If the buyer makes false or misleading representations, it could affect the validity of the contract and allow the seller to cancel or seek compensation. For businesses, including accurate and truthful representations of purchaser clauses helps ensure that both parties are clear on the buyer's intentions and qualifications.
By including these representations, both parties can protect themselves from risks associated with fraudulent or ill-prepared buyers.
Understanding representations of purchaser through an example
Imagine a company selling a piece of equipment to another business. The seller includes a representation of purchaser clause stating that the buyer has the financial resources to make the purchase. If the buyer later fails to make the payment and is unable to prove they had the necessary resources, the seller might be able to terminate the agreement and seek compensation for any losses incurred.
In another case, a real estate seller might include a representation of purchaser to confirm that the buyer has the legal capacity to complete the purchase and that the buyer is not restricted by any external agreements or financial issues that would prevent the transaction from going forward.
An example of a representations of purchaser clause
Here’s how a representations of purchaser clause might be reflected in a contract:
“The Purchaser represents and warrants that they have the necessary funds available to complete the purchase and that they have full authority to enter into and perform this Agreement.”
Conclusion
Representations of purchaser are vital for ensuring that the buyer in a contract is capable, qualified, and committed to completing the transaction. These representations help protect both parties, particularly the seller, by confirming the buyer's intent and ability to fulfill the terms of the agreement. By including accurate representations, businesses can reduce the risk of disputes or defaults in the contract.
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.