Representations are factual statements that a provider makes about the provider’s operations and include the provider’s capabilities, among other things. Most importantly, companies should ask for representations that affirm the provider’s ability to perform under the contract and any special promotional statements the provider made.
Warranties are like representations, but they are more like factual promises than statements. In the indirect procurement context, critical warranties include what form and state goods will arrive in or how services will be performed. Companies may benefit from warranties regarding cost savings plans (especially in outsourcing scenarios) and performance standards such as delivery/performance guarantees involving certain dates and times, speeds, etc. Warranties may also concern the performance of other third party vendors involved in the procurement process on the provider’s end. Warranties are crucial to a strong indirect procurement contract.
If you are a business leader considering indirect procurement, you should work with an attorney to structure your contract in accordance your specific needs. This article was sponsored by Vlodaver Law Offices, LLC, an experienced business solutions and transactions law firm in the Twin Cities. If you would like a free legal consultation, contact us, or call at 612-424-1LAW.