Representations And Warranties In An Agreement
The Idemitsu Kosan Co Ltd/Sumitomo Co Corp case in 2016 reiterated this point. In this regard, the Tribunal concluded that it was not sufficient for the purpose of the guarantee to be representation; there was no representation because there was no explicit provision to that effect. The fact that the agreement contains a full contractual clause also highlighted the fact that pre-contract agreements, communications or assurances were not invoked or withdrawn prior to their conclusion. Insurance, guarantee and compensation clauses are widely used clauses in bargaining contracts, particularly in the case of M-A transactions. The interests of the contracting parties generally do not comply with the treaty`s representation and guarantee clause, which generally includes a substantial part of the agreement. With regard to transactions in the market, the seller wants to strengthen the scope of insurance and guarantees and reduce the risk of injury and injury, but the buyer wants the buyer to position himself as widely as possible in order to isolate himself from the risks. Representations differ from case to case, based on information such as the size and nature of the target company, the interests acquired, the type of investors and the type of investors I, the parties involved. Representations and guarantees are generally supported by compensation from the party providing them. Therefore, the party may be held responsible for a claim of compensation from the other party in the event of a violation of these insurances and guarantees.
As noted above, the ICA, which is the legal right of contracts in India, does not define « representation » and « guarantee. » In fact, the word guaranteed is not mentioned in the legislation. This raises the obvious question of whether Indian law distinguishes between representations and guarantees in normal contracts. Representations and guarantees are often highly negotiated areas of an agreement. The number and type of insurance and guarantees are specific to each party, the nature of the contract itself and the purpose of the contract or transactions. A guarantee is an obligation or provision that a given fact with respect to the purpose of the contract is or must be as indicated or promised; and refers to an agreement to protect the beneficiary from the loss if the fact is or becomes false (i.e. tacit compensation). « Representations » and « guarantees » differ conceptually; However, in practice, they have often been pooled and used interchangeably. This is particularly true in India, where the terms have not been defined under the ICA, leaving room for ambiguity. However, the two concepts are different and have different characteristics and different remedies for violation of them. Understanding the differences between the two parties and using them appropriately is essential to ensure that a treaty is well developed and that the interests of both parties are well protected. This distinction between representations and guarantees in the case of the Life Insurance Corporation of India and permanent Lok Adalat and Ors. Violation of a warranty entitles you to damages, but does not give the right to refuse the contract.
On the other hand, misrepresentation is defined within the framework of the ICA and the corrective measures contained in it are included. A seller`s representations and guarantees are intended for a number of related purposes. They serve as disclosure of the seller and the seller`s transaction from a given date, provide important information about the shares or assets sold, provide a basis for the buyer`s right to terminate or terminate the transaction, and infringe on the buyer`s right to be compensated by the seller and/or his contracting entities.