In the United States, courts and most practitioners attribute no particular significance to use of the phrase represents and warrants to introduce statements of fact. By contrast, some commentators suggest that the phrase has implications for remedies or pertains to the timeframe of the facts in question. In fact, the phrase is pointless and confusing.
This article will show that to avoid confusion, you should do two things. First, use states to introduce statements of fact in a contract. And second, if you want to exclude particular remedies or make sure that they’re available, do so explicitly instead of relying on what is inscrutable and unreliable code.
Usage
In business contracts, represents or warrants or both are used to introduce statements of fact by parties – statements relating to matters that they broadly control or that fall within the scope of their operations. (A different function is served by use of the verb warrants and the noun warranty on their own, without represents and representation, regarding goods in a contract for the sale of those goods. That’s beyond the scope of this article.)
Remedies for Inaccurate Statements of Fact
Determining what represents and warrants each mean requires considering the remedies available under U.S. law for inaccurate statements of fact in a contract.
Due to how the common law has developed, if a party’s statement of fact turns out to have been inaccurate, the counterparty might be able to bring a tort-based claim for misrepresentation, a contract-based claim for breach of warranty, or both.
In that context, the simplest meaning of representation is that it’s a statement of fact that might support a claim for misrepresentation. And the simplest meaning of warranty is that it’s a statement of fact that might support a claim for breach of warranty.
The Remedies Rationale
Some U.S. commentators have attempted to attribute significance to each verb in represents and warrants. They fall into two camps, one offering what this article calls the “remedies rationale,” the other offering what this article calls the “timeframe rationale.”
Whether a contract party is able to bring a claim for misrepresentation or a claim for breach of warranty for an inaccurate statement of fact made by the other party can have significant practical implications. According to the remedies rationale, a drafter can ensure that a statement of fact is treated as a representation, as a warranty, or as both by introducing that statement of fact with represents, warrants, or both, respectively, or by identifying that statement as a representation, a warranty, or both. The most vocal advocate of the remedies rationale is Tina L. Stark, in her book Drafting Contracts: How and Why Lawyers Do What They Do 15, 137–38 (2d ed. 2014).
The remedies rationale comes in two flavors, which this article calls “permissive” and “restrictive.” Under both the permissive remedies rationale and the restrictive remedies rationale, explicitly describing a statement of fact as a representation, a warranty, or both, by means of an introductory verb or otherwise, is sufficient to make it so.
Where the permissive and restrictive rationales differ is how they treat a statement of fact that isn’t introduced by represents or warrants, or both, or otherwise explicitly characterized as a representation, a warranty, or both. Under the permissive version, such a naked statement of fact could still be deemed a representation or warranty, respectively, depending on the nature of the statement itself. By contrast, the restrictive version holds that a statement of fact will support a claim for misrepresentation only if it is introduced with represents or is referred to as a representation, and a statement of fact will support a claim for breach of warranty only if it is introduced with warrants or is referred to as a warranty. So under the restrictive version, failure to use represents, warrants, or both, or to otherwise explicitly characterize a statement of fact as a representation, a warranty, or both, should prevent that statement from being deemed a representation or a warranty, or both, respectively.
In a comment to a blog post by this author (here), Stark has stated that she doesn’t suggest that using represents or warrants is the only way to make something a representation or warranty. That means she in effect endorses the permissive remedies rationale.
By contrast, Bryan Garner in effect endorses the restrictive remedies rationale. In the entry for representations and warranties in Garner’s Dictionary of Legal Usage 775 (3d ed. 2011), Garner suggests that if a statement of fact is introduced by only warrants and not represents, it wouldn’t constitute a representation supporting an action for misrepresentation: the drafter would be in a position to limit what sort of claims could be brought for an inaccurate statement of fa
The Phrase "Represents and Warrants" Is Pointless and Confusing
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