1. Disclosure of outstanding notices or basis for notices is important to a continuing business: “Seller has not received written or oral notification that any of its current or past operations or a by–product thereof is related to
This most common of representations and warranties is most often abused. Buyer or tender may initially want a flat representation that there are not now and never have been any Hazardous Materials on the premises or any operations that generate, use, treat, store, or dispose of Hazardous Materials. Difficulties that immediately arise include
Although the possession of and compliance with all necessary permits is important information for a buyer expecting to continue a business or a lender depending on the viability of a business, representations regarding permits do not necessarily cover potential liabilities for remediation or third party damages.
A typical provision states: “Except as set forth in schedule x.x and except for violations which would not have a Material Adverse Effect, seller is not and has not been in violation of any Environmental Requirements.
Typically the preamble for the representations and warranties will state that they are made to induce the buyer to purchase or the lender to make the loan contemplated.
1. Although buyer prefers seller’s representations and warranties to be absolute, seller will want to make them
Material Adverse Effect: In a sale of any ongoing business, one way to address the difficulty of being absolute in the representations and warranties when in fact the parties are not concerned about
Environmental Damages: This definition is a convenient place to collect all the possible liabilities and damages arising from the presence of hazardous materials on the property in violation of, or requiring remediation under,
Environmental Requirements: Traditionally the term used is “Environmental Law,” but “Requirements” is more accurate as the definition goes beyond statutes and regulations.
A major problem with definitions of environmental terms in commercial and real estate transaction documents is that they become overly inclusive, confusing, and unworkable. A definition of “hazardous materials” which includes virtually every substance known to man in any amount at any concentration, will be impossible to satisfy
A. Representations: a statement of fact to induce another party to enter into a contract.
B. Warranty: a promise that the statement is true; intended to relieve the promise (Buyer) from having to determine if the facts are true.
* Practice Tip: Representations and warranties are not a substitute for including,
