“Representations and Warranties”—A Handy 558-Word Analysis

It’s clear from reader feedback that I need to do a better job of explaining myself. Here goes:

It’s pointless and confusing to use in contracts the phrases represents and warrants and representations and warranties because …

• Because my informal inquiries indicate that most lawyers treat the elements of those phrases as synonyms, much as they do the two elements of indemnify and hold harmless. Using redundant synonyms adds unnecessary words and leaves room for a disgruntled contract party to attempt to insert unintended meaning into a contract.
• Because unless you have a compelling basis for doing so, ignoring how the mass of lawyers use words and instead claiming that, no, this is really what represents and warrants means is a dubious proposition.
• Because those who see represents and representations as meaning something different from warrants and warranties can’t agree on what the distinction means. (One camp, following the ABA Model Stock Purchase Agreement, thinks, citing flimsy evidence, that representations relate to past or existing facts and warranties to future facts. The other, following in the path of the 1625 English case Chandelor v. Lopus, thinks that which word you use determines whether with respect to a given incorrect assertion of fact you can bring a tort action for misrepresentation or a contract action for breach of warranty.)
• Because both camps ignore entirely the semantic context. If Acme is asserting a fact, you need a subject and a verb at the front to make it clear who is asserting that fact. You could say Acme states, or Acme asserts, but I recommend that you use Acme represents, because in legal writing it’s standard to use the verb represent to introduce any kind of fact. Also, drafters are more likely to drop one word of a traditional couplet than adopt a novel word.
• Because having the verb you use affect remedies would require that the verb constitute a “magic word”—it would be in code, as it would have to convey meaning that goes beyond what the reasonable, uninitiated reader would deduce. If you’re using magic words, you’re not drafting clearly.
• Because in the U.S., the caselaw and the Uniform Commercial Code show that the “magic words” approach to the meaning of represents and warrants has no foundation. If the mess that English courts have made of best endeavours is at all representative, I’d expect the situation to be murkier in England.
• Because if you’re worried about remedies, it would be slap-yourself-upside-the-head reckless to grope at the issue by tinkering with the verb used to introduce statements of fact. Instead, address the issue head on.
• Because represents and warrants and representations and warranties are used even in those contracts that specify indemnification as the exclusive remedy. In that context, the phrases couldn’t convey any implications regarding remedies—they could only be expressing redundant synonyms.
• Because if you address the issue of remedies head on, you can use whatever word you want, safe in the knowledge that no one could pick a fight with you on that issue. And that’s the essence of clear drafting—expressing your meaning clearly enough so that reasonable readers couldn’t dispute it.

I regard this issue as something of a litmus test. If you’re still using represents and warrants and representations and warranties, you’re a magic-worder.

(If you’re tempted to post a comment disagreeing, please read first the relevant discussion in MSCD, or at least the five other blog posts on this subject, and also provide backup for your arguments.)