Whether you are aware of it or not, you have likely entered into a transaction where representations and warranties were made. This weekend, for example, I purchased a Craftsman hand-held power tool. It came with a 3 year limited warranty (“For three years from the date of sale, the product is warranted against defects in material or workmanship.”), which gave me the confidence to make the purchase. And that is precisely the purpose of this section in a stock purchase agreement. Except that you are buying a company instead of a power tool, and this same logic must be applied to a highly unique operating entity. Also, millions of dollars are at stake.