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Simple English definitions for legal terms
warranty clause
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A quick definition of warranty clause:
A warranty clause is a part of a contract that promises something. In the oil and gas industry, it is a part of a lease that says the person who owns the land promises that they own it without any problems and will protect it. If they break this promise, they may have to pay the person who leased the land. This clause can also make sure that any new things the owner gets on the land will belong to the person who leased it.
A more thorough explanation:
A warranty clause is a part of a contract that contains a guarantee or promise made by one party to another. This clause is often included in oil and gas leases, where the lessor promises that the title to the property is free from any defects and agrees to defend it.
For example, if a person leases a piece of land for oil and gas exploration, the lessor may include a warranty clause in the lease agreement. This clause would guarantee that the lessor has the legal right to lease the property and that there are no other claims or liens on the property that would prevent the lessee from using it for its intended purpose.
If the warranty is breached, the lessor may be held liable to the lessee for any damages suffered as a result. This means that if the lessee discovers a defect in the title or a competing claim to the property, the lessor may be required to compensate the lessee for any losses incurred.
The presence of a warranty in an oil and gas lease can also have other legal implications. For example, it may cause after-acquired interests to pass from the lessor to the lessee by application of estoppel by deed. This means that if the lessor acquires additional interests in the property after the lease is signed, those interests may automatically transfer to the lessee.