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The Jolly Contrarian’s Glossary

The snippy guide to financial services lingo.™

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An assertion about the current state of affairs, that pertains right now, as we speak, in the universe out there, beyond one’s intellectual apparatus; “res extensa” in the argot of Cartesian metaphysics, and not “res cogitans”. To be distinguished from mere opinion, and particularly, legal opinion.

A present fact is the sort of thing one attests to by way of representation — before your contract is afoot — or warranty, once you’re signed, sealed and delivered and underway. Purists would say that a warranty is no more suitable for a statement of future fact than is a representation — if, epistemologically, a “future fact” is even a thing, and those same purists would say it is not — for who knows what the future brings? The common law is no hard determinist; the golden thread of precedent looks backward, not forward; the slings and arrows of outrageous fortune may yet pin us to a different hill. If the future is a soufflé, it is not so much that it hasn’t yet risen, but that the jurists who might be eating it have not yet decided whether they’re even going to that restaurant, and nor do they know whether it even has soufflé on the menu in the first place.

But, as ever, the Americans seem to have a different, and confused, idea about what representations and warranties are. This is ably, if a little laboriously, explained by the author of A Manual of Style For the Drafting of Contracts.[1] Across the ditch they see the representation to be a statement of a past fact in a contract for which a party assumes responsibility, whereas a warranty is an equivalent statement of future fact — apparently the Americans have more truck with determinism than we do. Though apparently attested to by no less august an institution than the American Bar Association[2] this seems wrong, even in the Land of the Shining Beacon on the Hill, and certainly under English law, as a matter of common sense. Warranties and representations, surely, both address matters of existing or historical fact; assurances as to what will come about in the hereafter — which, as Criswell would tell you, are the meaty ones, for the future is where you and I are going to spend the rest of our lives — are called “promises”.

One should never represent or warrant as to matters of law:[3] A legal eagle opines on those.

See also


  1. Here, for those needing a sleeping draught.
  2. Commentary on the ABA model stock purchase agreement, 2011.
  3. A rule wholeheartedly honoured in the breach: the representation that one’s obligations are legal, valid and binding is standard boilerplate in financing contracts, however illogical it may be.