Representations and warranties: Difference between revisions

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 falsehood of these statements as to fail for a lack of consensus. In which case the are little more than handsomely formatted, version of the dialogue that passes between merchants in the fog of commercial negotiation. Since both parties have signed their name to them, their evidential value is unimpeachable, but they are still no more than a record of what assurances where given as a prelude to signing the contract.

There is a colour of logic if your counterparty is one of the few organisations that are susceptible to [[ultra vires]]. Here, a [[representation]] (as opposed to a [[warranty]]) in this case gives you a leg to stand on if your {{t|contract}} turns out to be void for [[ultra vires]], as that [[misrepresentation]], 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]]. Without it you have a [[warranty]] that — as you have just learned — is part of a contract which has been voided ''[[ab initio]]'' as being outside the powers of your counterparty.<ref>These days, [[ultra vires]] has largely receded from the corporations 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>

So, why have both?

BECAUSE [[Chicken Licken|THE SKY MIGHT FALL IN YOUR HEAD]] IF YOU DON’T, YOU DOLT. 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 for breach (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, in Casanova’s immortal words —  [[if in doubt, stick it in]]. Be a lover, not a fighter.

Well, that lone wolf of clarity on the prairie of dense American legal drafting, {{author|Kenneth A. Adams}} 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''”.