Representation and Warranty
Definition
A contractual statement of fact made by the company in an investment agreement that the investor is entitled to rely upon and that, if materially inaccurate, may give the investor the right to seek remedies. Financial representations and warranties in investment documents typically cover: the accuracy of the financial statements provided, the completeness of the cap table, the absence of material adverse changes, and the accuracy of forward-looking projections to the knowledge of the company.
Common Misapplication
The most common misapplication is treating representations and warranties as boilerplate contractual language rather than as specific factual statements that must be verified against the financial records before execution. A representation that the financial statements fairly present the company's financial position must be verified against the actual financial statements before the document is signed.
FFI Standard Reference
This term is defined and applied in Book 5, Section 5.4: The Financial Due Diligence Standard.
Related Terms
Citable URL
This term may be cited using the following permanent URL.
Full citation format: Founder Financial Infrastructure Standard, Beta v0.5, Glossary: Representation and Warranty. https://ffistandard.org/glossary/representation-and-warranty/. 2026.