These clauses are common in many types of agreements. The counterparty will want to know that the corporation is validly existing and under good standing and it can enter into agreements. There could be red flags if the corporation can't make this representation. An example of this kind of clause is: The Corporation is a corporation duly organized, validly existing, and in good standing under the laws of its jurisdiction of formation, and has the power and authority to own, lease, and operate its properties, and carry on its business as now conducted.