• Timing – When must the representation be true? At the time the contract is signed? At the closing? Both?
• Changes – Is there a duty on the part of the giver to update the representations or disclose changes?
• Investigation – Is there a duty of inquiry on the part of the party giving the “rep”? Or can they plea willful blindness?
• Knowledge – Who is making the representation? Whose knowledge matters? The out of state asset manager may not realize that the operations crew routinely dumps chemical in ground. Is the knowledge of each principal of the entity giving the rep imputed? If so, how can that be limited?
• Damages – Is there a cap on the overall damages from the failure of a representation? Is there exposure for consequential damages? Punitive damages?
• Survivability – Do these reps only matter until closing? What is the post-closing liability? How long does it last?

Without careful consideration and drafting, these provisions can undermine the intended purpose and create more uncertainty (and liability!) than clarity. As a practical matter, we often advise our buyer clients not to rely on any representations or warranties, but rather use these as a tool or red flag for areas that need further investigation. For sellers, we help give appropriate statements with defined scope and certainty. More than just focusing on whether an agreement will include a given rep, we help buyers and sellers understand their liability and the big picture regarding the giving (or not giving) of particular representations and warranties. For more information please call (480) 889-8948, send an email to [email protected] or visit www.SteinLawPLC.com.