SOLVENCY AFFIDAVIT Sample Clauses

A Solvency Affidavit clause requires a party, typically the seller or borrower, to formally declare that they are financially solvent at the time of entering into an agreement. This is usually accomplished by providing a sworn statement or affidavit confirming that the party's assets exceed its liabilities and that it is able to meet its debts as they come due. The clause is commonly used in transactions such as asset sales or loan agreements to assure the other party that the declaring party is not on the verge of bankruptcy. Its core function is to protect the counterparty from the risk of engaging in a transaction with an insolvent entity, thereby reducing the likelihood of future disputes or losses related to insolvency.