CHAPTER 6

Representations

Representations are best viewed as affirmations by the borrower of facts or conclusions the lenders want to know are true. They are inserted into a credit agreement as a way to confirm the fundamental assumptions upon which the lenders agree to extend credit to the borrower. Although typically referred to as “representations,” a credit agreement normally provides that the borrower makes both representations and “warranties” to the lenders. When used together, the terms may be viewed as interchangeable, although there is an historical distinction between the two, at least in the insurance context. A warranty was always deemed part of the insurance policy and had to be strictly complied with whether material to the loss ...

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