This provision is based on Article 431.2 of the Civil Code of the Russian Federation, which regulates the procedure of representations of circumstances between the parties to the agreement and determines the consequences of their unreliability.
Article 431.2 of the Civil Code of the Russian Federation establishes the legal regulation of representations of circumstances given by the parties to each other during the conclusion and execution of agreement.
A representation of circumstances is a statement by one party on the existence or non-existence of certain facts or conditions that are important for the other party in making a decision on concluding and executing the contract.
If a representation is untrue, the party who relied on the representation is entitled to recover damages from the other party for the loss caused by the misrepresentation. This important provision serves as an additional safeguard of the parties' good faith and transparency in the business relationship.
In order to ensure the fulfillment of the obligations under the representations, the parties may provide for additional conditions and controls in the contract. This not only helps to protect the interests of both parties, but also creates a more stable and reliable contractual relationship.
The proposed clause can be used in a sale and purchase agreement and includes both the seller's and buyer's representations.