What is considered a representation?

A Representation is a statement of fact which is relied on by the receiving party and induces them to enter into the contract. It is normally before the contract, but may be repeated in the contract as well. A party may claim misrepresentation where a false representation has been made.

When does a representation become a contractual term?

A statement, which relates to a matter of fact or present intention, made during contractual negotiations, which the parties do not ordinarily intend will become a contractual term, but which may induce another party to enter into a contract. However, in the context of a finance transaction, a representation will often become a contractual term.

How is a representation used in a Finance document?

However, in the context of a finance transaction, a representation will often become a contractual term. Representations (and warranties) in finance documents are statements which an obligor makes, in express terms, about itself and the circumstances of the debt or security.

Can a secured party be disclosed against a representation?

From the financier’s, or secured party’s, point of view, they set out the factual matrix on which it has agreed to make available the loan, or accept security. They are not typically disclosed against (in contrast to representations made in corporate finance documents, such as sale and purchase agreements).

What happens if there is a breach of representation?

Although a breach of representation (or warranty) may entitle the person receiving the representation to a remedy for misrepresentation (for example, rescission) or breach of contract, in finance documents, such a breach also constitutes an event of default. © 2021 Thomson Reuters. All rights reserved.

Is it necessary for a representation to have been received?

It is not necessary for the representation to have been be received directly; it is sufficient that the representation was made to another party with the intention that it would become known to a subsequent party and ultimately acted upon by them. However, it IS essential that the untruth originates from the defendant.

A statement, which relates to a matter of fact or present intention, made during contractual negotiations, which the parties do not ordinarily intend will become a contractual term, but which may induce another party to enter into a contract. However, in the context of a finance transaction, a representation will often become a contractual term.

However, in the context of a finance transaction, a representation will often become a contractual term. Representations (and warranties) in finance documents are statements which an obligor makes, in express terms, about itself and the circumstances of the debt or security.

From the financier’s, or secured party’s, point of view, they set out the factual matrix on which it has agreed to make available the loan, or accept security. They are not typically disclosed against (in contrast to representations made in corporate finance documents, such as sale and purchase agreements).