Representations, Warranties, Covenants, Conditions, and Indemnities: Stitching Them Together in the Purchase Agreement
Purchase agreements are contracts. They are, metaphorically speaking, the fabric of the mineral properties acquisition. Representations, warranties, covenants, conditions, and indemnities memorialize the parties' promises. These promises are the warp and woof; the very essence of the deal. Lawyers stitch them into patterns that protect, limit, hedge, and qualify the parties' objectives.
The universal use of purchase agreements and the staggering values exchanged at closing belie the paucity of legal writing on the subject. Either purchase agreements are so well understood that there are no questions to answer or lurking problems to expose; or the natural resources community is oblivious to the confusion created by the intertwined provisions. All too often the industry resorts to stock forms containing boilerplate language without fully understanding the relationship of each provision to the other until deals unravel. Many agreements have a patchwork feel, as though sewn together out of old cloth. Parabolically, we have been warned about crafting new garments from old cloth.2 In short, the industry's use of purchase [3-7] agreements tends to be a rote rather than an intellectual experience.
What little has been written on purchase agreements appears, in large measure, in past proceedings of this and special institutes of the Foundation.3 The literature compris
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