Representations and Warranties

Representations and warranties are the factual assurances the parties give each other. A representation is a statement of fact as of a point in time ("the company is properly incorporated"); a warranty is a promise that a statement is and will remain true. In practice the two travel together as one clause.

They matter because the other side relies on them to sign. If a representation turns out to be false, that can trigger indemnification or a right to terminate. This clause is where each party formally stands behind the facts that made the deal worth doing.