This Article is written from the perspective of an employer.
Representations are the statements of past or present facts whereas warranties are the promise of current and future conditions. Every contract includes Representations and Warranties and these are the underlying facts as presented by one party to another to induce them to enter into a contract and with the intent that the other party will rely on them to their detriment.
Representations and Warranties clause forms an important part of a Consultancy Agreement and is also beneficial for both the Parties to the Contract as it allows the consultant to disclose all the important information to the employer in order to avoid any potential liabilities and simultaneously it allows the employer to obtain all the information and assurances from the consultant.
Assurances in terms of representation and warranties that an employer must get from a consultant in the Consultant Agreement
- The consultant must give a representation that he is not and will not be in any way restricted or prohibited, contractually or otherwise, from performing the services for which he is hired.
- This representation from the consultant becomes necessary as the main purpose for entering into any consultant agreement is the performance of services and if the person is in any way restricted to perform such services, then the whole purpose of entering into such agreement fails.
- The consultant must give the representation to comply with all of the Intellectual Property Obligations provided for in the Agreement.
- It is important to protect the Intellectual property as it is critical for nurturing the innovations and without such protection the employer will not be able to reap the full benefits of their inventions.
- The consultant must give the representation that he has no relationship with any other individual/entity who is engaged in the business which provides for the same services for which the consultant is hired.
- This representation from the consultant becomes necessary in order to protect the confidential information of the employer from its competitors. Such representation from the consultant ensures the maintenance of the confidentiality.
- The consultant must give a representation that he is not an employee of the Company, and shall not represent to any other third-party or third-party entity that the relationship between the Consultant and the employer is beyond the scope of what is contemplated under the Agreement entered into between the employer and consultant.
- This representation from the consultant protects the employer from any possible fraud, or false representation to any third party by the consultant representing as an employee of the employer.
- The consultant must give a representation to the employer that he has the expertise and qualifications necessary to perform the services, or, at consultant’s own expense, will utilize employees or agents who have the necessary expertise and qualifications.
- This representation is one of the important representations as the whole basis of hiring a consultant is to receive a service which can’t be received internally by the employer and which requires perfection. If the consultant does not have that necessary expertise required to perform the services for which he has been hired then the purpose for hiring a consultant fails.
- The consultant must give a representation that no third party has any claim of ownership with respect to any of the work product delivered.
- This representation from the consultant protects the employer from any third party liability which may arise in case where the consultant has actually delivered a work product which belongs to any other party.
These are some of the representations and warranties that an employer can keep in mind while entering into a consultant agreement or any other similar agreement. However, it is also important to note that the representations and warranties in any agreement also depends on the facts and circumstances of the parties.