Representations And Warranties

Copyright 2009, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin on Commercial Real Estate, September 2009

Risk Allocation

Representations and warranties given by the vendor in favour of the purchaser are the primary means of allocating the risk of loss between the parties in the event that, either before or after closing, the condition or value of the property falls below expectations in some respect. While the scope of such representations and warranties may vary widely from one transaction to another, and may be influenced by factors such as the length of the due diligence period, generally speaking the vendor will be of the view that it should only provide assurances with respect to matters that the purchaser cannot otherwise discover for itself in the course of its own due diligence investigations. In practice, however, the scope of representations and warranties often goes farther than that. Also, in the current market environment,