Representations are statements made by one party which induce another party to enter into a contract. If a representation is untrue and it induced the contract, the innocent party may have a remedy for misrepresentation. The remedies for misrepresentation are rescission and/or damages. For fraudulent and negligent misrepresentation, the claimant may claim rescission and damages. The aim of damages is to put the claimant in the position they would have been in had they not entered into the contract. See Practice note, Misrepresentation: damages for misrepresentation.

Representations outside of the contract are not recognised.

Warranties are contractual terms which, if breached, entitle the innocent party to claim damages (but generally not to rescind or terminate the contract). The aim of these damages is different from those awarded for misrepresentation. The contractual measure of damages aims to put the innocent party in the position it would have been in had the breach not occurred.

Statements or assurances about factual matters are commonly designated as "warranties" in a contract (for example, a party may warrant that it has obtained all internal approvals necessary for entry into a contract). A warranty can relate to any event or possible future event (such as the reasonableness of a profit forecast), whether or not that event is within the control of a party to the contract.

In certain situations, terms may be implied into a contract, based on:

Additionally, legislation implies certain terms into specific types of contract (for example, contracts for the sale or hire of goods).

There are some implied warranties under the Russian Civil Code concerning the sale of assets (which could include the sale of shares) relating to title and unencumbered ownership and some basic assumptions about the quantity and the quality of the asset. However, these principles are aimed more at consumer transactions and are fairly limited in the context of an international finance or M&A deal.

Implied warranties cannot be altered, extended or reduced by contractual agreement between the parties. A seller cannot be held liable for any false statements.

Fundamental issues (such as protection for liabilities) cannot currently be dealt with under warranties. On a sale of shares in a company, implied warranties only relate to the shares themselves and not to title, ownership or condition of the underlying business and assets of the company to which the shares relate.

An indemnity is a contractual promise to compensate for loss arising from an identified occurrence or event. Indemnities tend to be used where there is a known or potential, clearly identifiable liability, the risk of which is to be borne by the party giving the indemnity (for example, a potential environmental claim). In tax matters on M&A transactions, the tax indemnities are often contained in a separate deed of covenant.

Indemnities are not currently recognised as a legal concept. In tax matters, some rulings of the Supreme Arbitrazh Court may be interpreted to prohibit establishment of a contract liability as a result of a public law event (such as a tax assessment, or outcome of a court hearing).