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Lotzar Law Firm P.C.

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480.905.0300 x103 8687 E. Via de Ventura, Suite 115 Scottsdale, Arizona 85258

What is the Difference Between a Recital, a Condition, a Covenant, a Representation, and a Warranty?

March 31, 2015 by Charles Lotzar

Contracts must meet certain requirements to be valid and to protect the rights of the parties to the contract. When entering into a contract, whether for real estate transactions or any other business transaction, contracting parties have a duty to read the contract and will be bound by the terms of the agreement.  signing-the-contract-204756-m

Before negotiating, drafting, and signing a contract, you need to understand its parts and ensure you include necessary provisions to protect your financial interests and the interests of your organization. A Scottsdale Arizona contract law attorney at Lotzar Law Firm, P.C. can provide invaluable assistance in understanding contract parts including a Recital, a Condition, a Covenant, a Representation and a Warranty. Call today to learn more.

Understanding a Recital, a Condition, a Covenant, a Representation, and a Warranty

A Recital, a Condition, a Covenant, a Representation, and a Warranty may all be found within contractual agreements – but all play different roles.

Recitals are optional. The general purpose is to provide additional background about the agreement. The Recitals may state the contracting party’s understanding of their current situation and purpose or intentions in creating the contract. Recitals are not generally enforceable as contract provisions. However, Recitals can be a valuable tool in contract interpretation if a dispute arises later.

Conditions are also not included in every contractual agreement. Conditions provide a description of things that must occur in order for a party to have an obligation to perform under the contract. A contract obligating a builder to begin construction, for example, may be conditioned on the developer successfully closing on a sale of the lot. If the sale of the lot does not go through, the Condition would not be satisfied and the builder would not begin construction.

Covenants are the heart of contractual agreements. Covenants are the promises the parties make to undertake certain actions or cause certain actions to be undertaken. Covenants can also involve incidental activities that either contracting party believes are needed to create the circumstances under which the contract will be performed.

Representations are assurances by a contracting party that certain circumstances or facts are accurate and true. The contract consideration or purpose for contracting may depend upon the truth of a certain fact or circumstance; Representations provide assurances of the necessary conditions and/or of the the existence of the necessary facts.

Warranties are also assurances made by a contracting party. However, Warranties are assurances that representations that are made are true, or will be true, at some future point before the transaction commences. Breaching this kind of warranty is usually an event of default under a Contract, creating a cause of action for Breach of Contract against the party to the Agreement who makes inaccurate or untrue Representations and Warranties.

Lotzar Law Firm, P.C. can provide assistance negotiating these and other contract terms when you or your organization is entering into an Agreement. To learn more about your legal rights and for assistance with drafting a contract that protects your interests, call today to speak with a Scottsdale, Arizona business lawyer.

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Charles Lotzar
Charles Lotzar
With more than 25 years of legal experience, Chuck Lotzar knows how to solve problems and make deals happen. He earned his Bachelor of Arts in Business from Michigan State University in 1982, and his Juris Doctorate from the University of Detroit School of Law in 1985. Mr. Lotzar has extensive experience dealing with public contracts and issues related to public officials and has been involved in bond financings with an aggregate value in excess of $5 billion.
Charles Lotzar
Latest posts by Charles Lotzar (see all)
  • How Often Do I Have to Re-Certify a Tax Credit Tenant’s Household Income? - November 12, 2015
  • Property Tax Abatement vs. Property Tax Exemptions – GPLET - November 12, 2015
  • Can You Restructure Your Business Under the Arizona Entity Restructuring Act? - November 5, 2015

About Charles Lotzar

With more than 25 years of legal experience, Chuck Lotzar knows how to solve problems and make deals happen. He earned his Bachelor of Arts in Business from Michigan State University in 1982, and his Juris Doctorate from the University of Detroit School of Law in 1985. Mr. Lotzar has extensive experience dealing with public contracts and issues related to public officials and has been involved in bond financings with an aggregate value in excess of $5 billion.

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How Often Do I Have to Re-Certify a Tax Credit Tenant’s Household Income?

Property Tax Abatement vs. Property Tax Exemptions – GPLET

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