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A statement, which relates to a matter of fact or present intention, made during contractual negotiations, which the parties do not ordinarily intend will become a contractual term, but which may induce another party to enter into a contract.
However, in the context of a finance transaction, a representation will often become a contractual term. Representations (and warranties) in finance documents are statements which an obligor makes, in express terms, about itself and the circumstances of the debt or security. From the financier’s, or secured party’s, point of view, they set out the factual matrix on which it has agreed to make available the loan, or accept security. They are not typically disclosed against (in contrast to representations made in corporate finance documents, such as sale and purchase agreements).