Template:Agent representations

Representations and warranties by agent

You might occasionally hear, from the counsel of an investment manager, a protest when you ask it to make representations on behalf of a principal.

“But I cannot,” she might say, “for I do not know if this is true unless the principal has told me it is true. I cannot assume personal liability for my principal’s obligations. I am but an agent.”

You must answer this firmly, along the following lines:

“No-one is asking you to assume personal liability for your principal’s obligations. We are asking the principal to assume liability for them. It is the principal’s responsibility under the contract. Ordinarily, of course, we would ask the principal directly, but it didn’t show up, and sent you instead. So, we are asking you to communicate these representations on your principal’s behalf.”

“Now, you might say you don’t know whether these representations are true, or that you are not sure whether you are authorised to make them on your client’s behalf. But think twice before admitting that because, really, you should have asked or, better still, explained to your client that a condition of signing master trading agreements is that you will have to make uncontroversial representations about your own capacity, authority, competence and sanity.”

“If you are still not comfortable proceeding, the answer is not to do without the representations: it is to do without the master trading agreement.”

“So what’s it going to be, punk?”