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Representations and warranties: Difference between revisions
Representations and warranties (view source)
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''See our new [[Representations and Warranties Anatomy]] for more about your favourite [[representation]].'' | ''See our new [[Representations and Warranties Anatomy]] for more about your favourite [[representation]].'' | ||
== | ==Overview== | ||
{{representationdescription}} | {{representationdescription}} | ||
{{warrantydescription}} | {{warrantydescription}} | ||
==The short view== | |||
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]]. | |||
===So why have both?=== | ===So why have both?=== | ||
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)? | 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. | 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. | ||
==Is it such a big deal?== | |||
Well, that titan of drafting style {{author|Ken 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] 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 “represents”, not “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 Ken: he’s a bit like a well-meaning uncle who just goes on a bit on his pet subjects — but we have trouble with this one. The key to the problem reveals itself in the first paragraph of his monologue: | Well, that titan of drafting style {{author|Ken 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] 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 “represents”, not “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 Ken: he’s a bit like a well-meaning uncle who just goes on a bit on his pet subjects — but we have trouble with this one. The key to the problem reveals itself in the first paragraph of his monologue: | ||
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===What sort of things does one represent or warrant about?=== | ===What sort of things does one represent or warrant about?=== | ||
====Facts==== | ====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]] [[File:Dramatic Chipmunk.png|200px|thumb|right|[[Dramatic look gopher]] yesterday]]— [[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 | 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]] [[File:Dramatic Chipmunk.png|200px|thumb|right|[[Dramatic look gopher]] yesterday]] — [[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 | 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==== | ====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. | 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. | ||