An eagle-eyed reader who is aware of my long-standing interest in the phrase represents and warrants told me about a 2008 opinion of the Arizona U.S. District Court, Aspect Systems, Inc. v. Lam Research Corp. (Go here for a PDF copy.)
Here’s the bit that the caught my reader’s eye:
Neither Aspect nor Lam has proved the absence of a genuine issue of material fact regarding the alleged breaches under the 2002 agreement. In the agreement, Lam represented that “it has been using the Assets in the manufacture, service or repair of the AutoEtch and Drytek machines.” (Doc. # 67-2, Ex. 3 ¶ 3a.) That constitutes a warranty that the parts were not obsolete, but rather that they were substantially current, active parts that could be resold.
So in the 2002 contract, Lam made a statement of fact introduced using “represents.” (I confirmed that by checking the contract itself, a copy of which is available here.) The court then referred to that statement as a “warranty.”
According to any magic-worders out there, use of the word “represents” should have caused the court to consider the associated statement of fact to be a representation, leading the court to hold that the only possible cause of action for inaccuracy was an action for misrepresentation (a tort claim) and not an action for breach of warranty (a contract claim).
But by describing the statement as a warranty, the court in effect declined to attribute magic-word significance to the verb represents. No surprise—there are zero U.S. cases in which a court has endorsed the magic-words approach. But even though there’s no shortage of cases reflecting the Aspect Systems approach, it’s helpful to be reminded of them.
In fact, revisiting represents and warrants has caused me to reassess how to handle it. Watch this space.
Ken, don’t fall into the trap of indulging in magic-wordery of your own. The district court made only a single mention of the term “warranty” (at IV.A). That one mention came in the context of holding merely that triable fact issues existed — issues that would have arisen in either a breach-of-warranty claim or a misrepresentation claim, namely “which parts Aspect was purchasing, the quality of the parts delivered to Aspect, whether the parts that Lam retained and later sold to other customers were subject to the agreement, and whether Lam fulfilled its obligation to provide supporting specifications and drawings.”
As a result, the court had no need to — and didn’t — address the contract’s conspicuous disclaimer of warranties, in the paragraph immediately preceding the representation language quoted in the opinion:
This disclaimer language would seem to suggest that the parties intended the representations not to constitute a warranty, and the court’s casual phrasing to the contrary was simply a harmless error.
(Nice job tracking down and providing a link to the contract, by the way.)
So if I were you I wouldn’t put a lot of weight on the court’s one mention of the term “warranty.”
D.C: I confess that I have no interest in the broader context of the dispute. Ken
I see the point but I bet there is authority the other way? Just how much influence will this one judgment have? And it will be a matter of fact , not law , in each case………..I say keep on being prolix in this area
Haward: This is just one example. And there’s ZERO authority supporting the magic-word approach. Ken