What does the term 'representation' refer to in contract law?

In contract law, the term 'representation' specifically refers to a statement made by one party that influences or induces another party to enter into a contract. This statement is typically factual in nature and is made before or at the time of the formation of the contract. If a party relies on this representation and it turns out to be false, they may have grounds for a claim of misrepresentation, which can affect the validity of the contract or lead to damages.

While promises to perform in the future relate to contractual obligations, they do not fall under the definition of representation. A binding agreement between two parties encapsulates the essence of a contract but does not directly define what a representation is. Similarly, a document summarizing contract terms refers more to formal aspects of the agreement rather than the concept of representation leading to the contract's formation. These distinctions highlight why the understanding of representation as an inducing statement in contract law is critical in analyzing contractual relationships and potential disputes.