Capacity
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Representations and Warranties Anatomy™
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A good subject for a representation, a bad one for a warranty.
Whether your counterparty is even constitutionally capable of entering into obligations of the type contemplated by your contract, is a question of its capacity (as to which see also ultra vires). In this day and age, capacity — once a rich source of legal paranoia — is largely a dead letter among commercial enterprises in sensible jurisdictions, but it is still a banana skin for municipal bodies and local governments. Even thirty years on, the words “Orange County” or “Hammersmith and Fulham council” will be enough to get buttocks clenching in your risk department.
Now this presents issues if you will look to your contract to enforce this warranty. For if your client was without the capacity to enter into your contract then its contractual warranty that it had that capacity doesn’t get off the launch pad: You have a chicken-licken and egg problem.
Often combined with the authority representation into a capacity and authority rep. But they’re quite different things, in this commentator’s pedantic view.