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Representations and Warranties

In: The Medium-Term Loan Market

Author

Listed:
  • J. A. Donaldson

    (Imperial Chemical Industries)

  • T. H. Donaldson

    (Morgan Guaranty Trust Company of New York)

Abstract

Before it can sensibly make a loan, a bank must assure itself of certain fundamental facts about the borrower. The simplest way of obtaining that assurance is for the borrower to warrant that the information is accurate. This is the primary function of the Representation and Warranty clauses, the first draft of which is usually fairly all-embracing, to enable the bank to check its assumptions. If a company cannot confirm one or more of them, it must explain to the bank why not and either suggest amended wording or strike out the particular sub-clause entirely. If the assumption was so basic that the bank either cannot make the loan at all or requires offsetting protection elsewhere, the earlier this is discovered the better for both parties.

Suggested Citation

  • J. A. Donaldson & T. H. Donaldson, 1982. "Representations and Warranties," Palgrave Macmillan Books, in: The Medium-Term Loan Market, chapter 9, pages 141-152, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-349-06242-3_9
    DOI: 10.1007/978-1-349-06242-3_9
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