Representations and warranties: Difference between revisions

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 Since both parties have signed their name to a contract, which sets out these representations for the record in triple-tempered eleven-point Helvetica, their evidential value is unimpeachable, but they are still no more than representations: assurances given as a prelude to signing the [[contract]].
-There is a further colour of logic to including representations in your contract if your counterparty is one of those rare organisations that are susceptible, in these modern time, to [[ultra vires]]. Here, a [[representation]] (as opposed to a [[warranty]]) gives you a leg to stand on should your {{t|contract}} turn out to have none, being void for [[ultra vires]]. Now that assurance, freed from the usual shackles of [[concurrent liability]] — since there is, [[Q.E.D.]] no [[contract]] — dangles fruitily before you as an open-and-shut action in [[tort]] for [[negligent misstatement]]. There is no [[ultra vires]] defence to a [[tort]]. But as a [[warranty]], being part of a contract which — as you have just learned — is void ''[[ab initio]]'' as being outside the powers of your counterparty to make.<ref>These days, [[ultra vires]] has largely receded from the corporate governance frameworks in most sensible jurisdictions so only weird counterparties like municipal councils — yes, and why are ''they'' trading tranched [[CDO]]s? — pose a serious risk.</ref> A [[warranty]], in this unique scenario, is useless.
+There is a further colour of logic to including representations in your contract if your counterparty is one of those rare organisations that are susceptible, in these modern time, to [[ultra vires]]. Here, a [[representation]] (as opposed to a [[warranty]]) gives you a leg to stand on should your {{t|contract}} turn out to have none, being void for [[ultra vires]]. Now that assurance, freed from the usual shackles of [[concurrent liability]] — since there is, [[Q.E.D.]] no [[contract]] — dangles fruitily before you as an open-and-shut action in [[tort]] for [[negligent misstatement]]. There is no [[ultra vires]] defence to a [[tort]]. But as a [[warranty]], being part of a contract which — as you have just learned — is void ''[[ab initio]]'' as being outside the powers of your counterparty to make,<ref>These days, [[ultra vires]] has largely receded from the corporate governance frameworks in most sensible jurisdictions so only weird counterparties like municipal councils — yes, and why are ''they'' trading tranched [[CDO]]s? — pose a serious risk.</ref> in this unique scenario, it is useless.
 ==Is it such a big deal?==
 So, why have both? BECAUSE [[Chicken Licken|THE SKY MIGHT FALL IN YOUR HEAD]] IF YOU DON’T. Didn’t you learn ''anything'' at law school? Wouldn’t your client rather have the [[option]] to [[rescind]] the contract (if it made a bad bargain) or sue for [[damages]] (if it made a good one)?
-You may wonder whether the usual rules about [[concurrent liability]] in contract and tort would have something to say about that but — and for the most part, they do — but in Casanova’s immortal words —  [[if in doubt, stick it in]]. Be a lover, not a fighter. Life is short, the total entropic tedium of the commercial universe is overwhelming, and nothing is gained from arguing the toss about whether something is a [[representation]] or a [[warranty]]. Keep your eye on the hall: what matters is that the ones you make are ''true''.
+You may wonder whether the usual rules about [[concurrent liability]] in contract and tort would have something to say about that but — and for the most part, they do — but in Casanova’s immortal words —  [[if in doubt, stick it in]]. Be a lover, not a fighter. Life is short, the total entropic tedium of the commercial universe is overwhelming, and nothing is gained from arguing the toss about whether something is a [[representation]] or a [[warranty]]. Keep your eye on the ball: what matters is that the ones you make are ''true''.
-Still, we mention for completeness that lone wolf of clarity on the prairie of dense American legal drafting, {{author|Kenneth A. Adams}} once devoted a [https://www.adamsdrafting.com/wp/wp-content/uploads/2015/06/Adams-Eliminating-the-Phrase-Represents-and-Warrants-from-Contracts.pdf 27-page scholarly monograph]<ref>Published in no less august a periodical than ''Transactions: The Tennessee Journal of Business Law'' [2015] Vol 16 at 203, if you want to read it in its original locale.</ref> to the subject — maybe a slow week in the practice — to argue the world is wrong, he is right, and the correct word is neither “[[Representation|represents]]”, nor “[[Warranty|warrants]]”, but “''states''”.
+===America===
+Still, we mention for completeness: that lone wolf of clarity on the prairie of dense American legal drafting, {{author|Kenneth A. Adams}} once devoted a [https://www.adamsdrafting.com/wp/wp-content/uploads/2015/06/Adams-Eliminating-the-Phrase-Represents-and-Warrants-from-Contracts.pdf 27-page scholarly monograph]<ref>Published in no less august a periodical than ''Transactions: The Tennessee Journal of Business Law'' [2015] Vol 16 at 203, if you want to read it in its original locale.</ref> to the subject — maybe a slow week in the practice — to argue the world is wrong, he is right, and the correct word is neither “[[Representation|represents]]”, nor “[[Warranty|warrants]]”, but “''states''”.
 Now the [[JC]] is the last person in the world who would take umbrage at flying one’s opinion straight into the face of global consensus — and we’re fond of Mr. Adams: he’s a bit like a well-meaning uncle who just goes on a bit on his pet subjects — but, still, we struggle with this one. The key to the problem reveals itself in the first paragraph of his monologue:
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 But they do a bit more than that. Mere “''statements'' of fact” are a bit of scene-setting: “It was a dark and stormy night”. “It was bluebell time in Kent”.<ref>{{cite|Hinz|Berry|1970|2QB|40}} per the great [[Lord Denning]].</ref> They add colour and richness to the reading experience but, unless they saddle someone with a clear legal obligation, they have no place in a [[contract]]. To be sure, legal contracts are shot through with all kinds of horrific linguistic tics, but they are generally free of unnecessary editorialising about the weather or the local flora. So, a simple ''statement'' in a [[contract]] — “the vendor ''states'' that it is duly incorporated in the state of Vermont”, or “the Purchaser ''states'' that the moon is made of blue cheese” — doesn’t achieve ''anything'' of legal significance, ''unless one can infer from it that its utterer accepts responsibility for losses occasioned as a result of another party relying on that state of affairs to her detriment''.
-Generally, one assumes contractual responsibility for the present or past state of the world by ''warranting'' that it is so, and as to its anticipated [[future]] state by ''promising'' it will be so.
+Generally, one assumes contractual responsibility for the existing state of the world by ''warranting'' that it is so, and as to its anticipated [[future]] state by ''promising'' it will be so.
 [[File:Dramatic Chipmunk.png|200px|thumb|right|[[Dramatic look gopher]] yesterday]]