Representations of the parties: Overview, definition, and example
What is representations of the parties?
Representations of the parties refers to the statements of fact each party makes in a contract about its legal status, authority, and other key matters relevant to the agreement. These statements are usually made at the time of signing and are intended to give the other party confidence that the contract is being entered into knowingly, lawfully, and based on accurate information.
Why is representations of the parties important?
These representations are important because they help establish trust, legal enforceability, and risk allocation between the parties. If a representation turns out to be false, it may trigger remedies such as indemnification, termination rights, or even legal action. Including mutual representations ensures that each party is making informed commitments based on verified facts, not assumptions or misleading information.
Understanding representations of the parties through an example
In a SaaS agreement, the service provider may represent that it is duly incorporated and authorized to provide the services, while the customer may represent that it has the authority to enter into the agreement and pay the associated fees. If the customer later claims it lacked internal approval, the provider may point to the representations as a basis for enforcement.
Example of how a representations of the parties clause may appear in a contract
Here’s how a representations of the parties clause may appear in a commercial agreement:
"Each Party represents and warrants to the other that: (a) it is duly organized, validly existing, and in good standing under the laws of its jurisdiction; (b) it has full power and authority to enter into and perform its obligations under this Agreement; and (c) the execution and delivery of this Agreement have been duly authorized by all necessary corporate or organizational actions."
Conclusion
Representations of the parties are foundational statements in most contracts that confirm each side’s legal status, authority, and key facts relevant to the deal. They reduce risk, clarify expectations, and offer a basis for legal remedies if something turns out to be materially untrue. Careful drafting and review of these representations are essential for protecting both parties in any 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.