Contract Recitals, Covenants, Representations, and Warranties

Understanding Contract Recitals, Covenants, Representations, and Warranties

Contract Recitals, Covenants, Representations, and WarrantiesA contract is a binding agreement between parties, which can be enforced if one party fails to fulfill his promise. A contract may contain numerous sections and provisions, but not all of them are promises. So what are these provisions and what do they mean? Understanding contract recitals, covenants, representations, and warranties is essential to fully understanding what you’re agreeing to.

Recitals are usually one of the first sections of a contract. They are not required, but they are very helpful. Recitals provide general information about the parties and the agreement, such as the contracting parties’ intentions or understanding of the purpose for the contract. They are a good way to ensure that the contract is interpreted correctly by all parties.

Covenants are the center piece of a contract. They are what you think of when someone says there were “promises” made under a contract. Covenants are the promises that each party makes to the other regarding the contract. When one party fails to keep one of these promises, that party is said to have “breached” the contract.

Representations are statements made by one of the contracting parties about a fact concerning the contract. Representations and covenants can look very similar, but they are technically very different. The difference is in the details even though both look like promises.

The difference between a covenant and a representation is that a covenant is a promise that one party will do something in the future while a representation is a promise that a present fact or circumstance is true.

For example, in a real estate contract a representation would be a statement by the seller that there are no defects in the sewer system (i.e. a present fact or circumstance). While a covenant in a real estate contract would be a statement by the buyer that the buyer will pay the purchase price on a certain date (i.e. a promise to do something in the future).

Warranties are one step deeper. A warranty is a statement that the representations are true. The function of a warranty is that if a representation is untrue, then the contracting party who made the representation is on the hook for breach of warranty—a separate and distinct cause of action with its own set of remedies (money awards).

If you have any questions about a contract or would like to speak with an experienced Florida business attorney or contract attorney, contact Boyer Law Firm today and set up a consultation.

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