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{{a|rep| | |||
[[File:Limited Warranty.jpg|450px|thumb|center|An ''objet trouvée'' for our times.]] | |||
}} | |||
==Representations== | |||
{{representationdescription}} | {{representationdescription}} | ||
== | ==Warranties== | ||
{{warrantydescription}} | {{warrantydescription}} | ||
=== | ==“[[Criswell]]” reps and warranties: as to the [[future]]== | ||
{{future facts}} | |||
==On the need for both reps ''and'' warranties== | |||
Our view is for all intents and purposes beyond ''[[ultra vires]]'', [[representations and warranties]] boil down to ''[[warranties]]''. The giveaway is that they appear in a [[contract]], so are made rather too late in the day to be meaningful pre-contractual representations. For them to have any force ''as'' representations, your operating theory has to be that the contract, though executed, has been so compromised by the falsehoods from which these statements are woven as to fail for lack of [[Consensus ad idem|consensus]]. In which case they are little more than a handsomely-formatted transcript of the dialogue that passed between merchants in the fog of commercial negotiation, before the [[contract]] got to the consummated point we now find it to be in. | |||
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> 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 ball: what matters is that the ones you make are ''true''. | ||
===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 but, still, we struggle with this one. The key to the problem reveals itself in the first paragraph: | |||
:''The phrase “represents and warrants” is a fixture in English-language contracts. It’s used to introduce statements of fact, as are the verbs “represents” and “warrants” used separately. And the words “representation” and “warranty” are used to refer to statements of fact in a contract.'' | |||
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 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]] | |||
==“Warranty” in the sense of a ''consumer'' warranty== | |||
Consumer protection is, as you know, hardly the [[JC]]’s forté, but a warranty in a finance contract seems to me to be a different thing that a warranty on a toaster, and it is perhaps here whence the American confusion about future facts might arise. | |||
For, as logic surely demands, one can only exercise the warranty on one’s new toaster in the [[future]] — so does that not mean a toaster warranty must be a contractual commitment about its ''future'' merchantability? Perhaps not. The laws of [[entropy]], and [[Anti-fragile|fragility]], being what they are, a toaster’s innate fitness for purpose can hardly improve with time, so a subsequently-revealed want of suitability, must be a function of a defect that was latent — not apparent, but yet lurking there, out of sight — at the time of purchase. Thus, we can regard that warranty, when made, as a statement of ''present'' fact: that “this here toaster is so well made that it will not, without unforeseen intervention, stop working within the warranty period.” | |||
That it thereafter ''does'' stop working during the warranty period, you can view as rebuttable evidence that it was not made as well as claimed. After all, there are plenty of ways to invalidate the warranty on a toaster: by opening it up and poking around inside it; by using it against instructions, not wiping it regularly with a soft cloth, and so on. All these, we say, are directed at preserving the state of the toaster as sold, rather than ensuring the toaster’s ongoing merchantability against all the idiotic tribulations a consumer can put an innocent device through. | |||
==What sort of things does one represent or warrant about?== | |||
'''Facts''': Matters of '''fact''' relating to the internal workings of one’s organisation that are not readily apparent to an outsider looking in, and which have a direct bearing on the enforceability of the {{t|contract}}. For example, that execution of the contract has been properly authorised by any internal procedures — this helps in a little way to give comfort that, if push came to shove, the {{t|contract}} could not be set aside as not having been validly entered. Unless you are trading with a municipal authority such as — cue [[dramatic look gopher]] — [[Orange County]] or [[Hammersmith and Fulham council]], this is a fanciful, [[chicken-licken]]ish fear in this day and age, but it is hardly an imposition to make this rep, so just go with it. Some matters of fact — such as your counterparty’s internal motivation or intent in entering the contract — are silly things to seek representations or warranties about, because it is impossible to gainsay them. As legal artefacts, they are completely useless. For a great example of such a useless [[warranty]], see Para {{gmslaprov|14(e)}} of the {{gmsla}}. | |||
'''''Not'' laws''': Generally speaking matters of '''law''' are ''not'' appropriate for reps or warranties — if you want a legal opinion you should, well, get a [[legal opinion]] — but every rule is made to be broken and there are some practical exceptions: [[reps and warranties]] as to one’s own legal capacity to enter into a contract or the transaction contemplated by it are common and not really objectionable: this is technically a matter of law but is uncommonly specific to your own organisation, and is a legal “fact” which you really should know about and your counterparty can’t really be bagged for not knowing. | |||
That said, if you happen to be wrong about it, this only tends to emerge at the point where your counterparty is trying to enforce your contract and finds it cannot. Hence: the difference between a [[representation]] and a [[warranty]]: as a [[warranty]], this is useless, because, [[QED]], the {{tag|contract}} must be enforceable to establish a breach of warranty that the contract is enforceable. It is a [[mobius loop]]. A [[misrepresentation]] that you have the [[capacity]] to enter into the contract sounds in {{tag|tort}}, and thus doesn't rely on the [[contract]] being valid: it is a statement to a [[neighbour]] to whom one owes a [[duty of care]]. | |||
{{Sa}} | |||
*[[Hedley Byrne]] | *[[Hedley Byrne]] | ||
*[[Negligent misstatement]] | *[[Negligent misstatement]] | ||
*[[Chicken Licken]] | *[[Chicken Licken]] | ||
{{ref}} | |||
{{Technical Tuesday|Nov 20}} | |||