Reps & warranties

Definition

The seller's statements of fact, with indemnity if they prove false.

Why It Matters

They are your main legal recourse after the money moves: when a stated fact turns out false, the indemnification tied to them is how you claw the loss back. Their scope, the survival period, and the basket and cap that gate a claim are worth real negotiation, because a rep that expires in six months protects the seller far more than it protects you.

In numbers: A seller reps that the $2,100,000 of revenue is real and the equipment works. When the reps turn out false, say $200,000 of it was already-cancelled contracts, the indemnification machinery (basket, cap, survival period) decides how much of the loss comes back.