What are “warranties and representations” ? In everyday business situations the word “warranty” is often used to mean a promise of quality and is often supported by repair or replacement obligations. However, in contract law the same word has been given at least two technical meanings by the courts: a) an undertaking of fact given under a contract and, b) a term which is not of fundamental importance to a contract and therefore, unless agreed otherwise, the breach of which will not automatically lead to a right of termination. In relation to the first meaning of contractual undertakings of fact, we often find a heading “representations and warranties” in contracts. Is there a difference between the two? Yes, there is. Although our U.S. cousins may not always be of the sameopinion, under English law a representation is a pre-contractual statement of fact made and constituting an inducement to enter into a contract. A warranty relates to a contractualundertaking. This long-established difference under English law was confirmed recently in the case of Sycamore Bidco Ltd v (1) Sean Breslin (2) Andrew Dawson [2012] EWHC 343 (Ch) where the court held that statements made in a contract were not representations because the parties had not expressly referred to them as such. In the Sycamore case the judge described “a conceptual problem” in treating contractual provisions as representations. In order to make a claim for misrepresentation, it is essential that the claimant was induced by therepresentation to enter into the contract. There is therefore what the judge called “a timing problem” because something that is contained in the agreement (and therefore has no effect until the agreement is signed) cannotbe said to have caused the agreement to be entered into. However, the judge left open the door to contracting parties expressly providing that certain statements were to be treated (also)as representations. It is critical in drafting contract to identify where and undertaking is a “warranty” or a “representation” or both. The difference is important since, in addition to any damages awarded, misrepresentations claims, if successful, could lead to a rescission of the contract whereas a breach of warranties could lead at worst to termination. reproduced from Lawspeak, September...
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Next Nuernberg Seminars: remember to book early!
Contract Management and Boilerplate Clauses 17-18 April 2015 Hotel Victoria Nürnberg German Contracts in English 17-18 July 2015 Hotel Victoria Nürnberg Introduction to Common Law and Legal English 11-12 September 2015 Hotel Victoria Nürnberg Masterclass: Contract Law Update 2015 4-5 December 2015 Hotel Victoria Nürnberg REGISTRATION FORMS etc.: augustinbugg.com/en/we-do/seminars/ For further information on the above seminars and workshops please contact us by telephone +49 (0) 911 945 8867 or by email seminar@augustinbugg.com or see our homepage at augustinbugg.com/en/we-do/seminars/ for further details and seminar...
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Contracts in English (2nd Edition) by Stuart G. Bugg
Frustrated, confused or just unsure about your contracts? Help is at hand! This is a book for second-language speakers dealing with English-language contracts. If you need to work with contracts in English and want to be able to better understand, develop, draft, amend and work with such agreements, this is probably a book for you. It is a short and concise no-nonsense guide to the key points and is intended to give a quick overview of the subjects of both law and language. The book is intended for lawyers, business people, contract managers, translators and anybody who is forced to confront Legal English in his/her day-to-day work. Subjects in the revised 2nd edition include: What exactly is a “contract”? Essential Elements Contract Formation Consideration Drafting and Interpretation Boilerplates Force Majeure Language Liability Penalties and Liquidated Damages Jurisdiction and Applicable Law Problems with Translations Warranties and Guarantees The book can be bought online at http://www.beck-shop.de/Bugg-Contracts-English/productview.aspx?product=10632636 Published in Austria, Germany, Switzerland and...