Statements of fact with consequences attached
In an acquisition or a significant commercial agreement, representations and warranties are statements one side makes about the facts, such as the condition of the business, its contracts, its compliance, and its liabilities. They work together with the disclosure schedules, where the seller lists exceptions, and with the indemnification provisions that say what happens if a statement turns out to be wrong. Qualifiers matter: a representation limited to the seller's knowledge, or to matters that are material, protects the buyer less than a flat statement, and the definition of knowledge often names specific individuals. Agreements also commonly set how long each representation survives after closing, with fundamental matters like ownership and authority often lasting longer than operational ones.
Preparing schedules and testing them
Sellers do better when the people who actually know the business help prepare the schedules, rather than leaving them to the deal team alone. Listing an exception that turns out to be unnecessary usually costs little, while leaving out a known problem can lead to claims after closing and, in some cases, to fraud allegations that contractual caps may not reach. Buyers should test the schedules against diligence findings and ask about any entry that is general or vague. Whether a buyer can recover for a breach it knew about before closing varies by state and by the agreement's language, so many agreements address that question directly. Representation and warranty insurance has become common in mid-market deals and changes how hard the parties negotiate over indemnity.
When a breach claim comes up
Post-closing disputes usually start with a notice of claim under the agreement, and the agreement typically sets the deadline, the required detail, and the procedure, so the notice should be prepared carefully rather than dashed off. We look at which representation is at issue, whether a schedule or qualifier answers it, how losses are defined, and whether baskets, caps, escrows, or insurance apply. On the sell side, we review whether the facts fall within the representation at all and whether the buyer's own conduct after closing contributed to the loss. Bring the signed agreement, the final schedules, the diligence reports, and the communications about the issue.
