June 15, 2021
Volume XI, Number 166
Login
58
NEW ARTICLES
Advertisement
Marc A. Primack
Dykema Gossett PLLC
Tweet
Advertisement
Representations, Warranties and Covenants: Back to the Basics in Contracts
Tuesday, December 1, 2009
“Representations,” “warranties” and “covenants” are so common in contracts that the words are likely to be overlooked. They appear not only as nouns, but as verb forms as well. Sometimes there is a separate section for each word, implying that they have distinct meanings. Often they are grouped together as “represents and warrants” or “represents, warrants and covenants.” Unfortunately, these repetitious phrases blur their meanings. Their imprecise use does not frequently result in litigation, but there’s much to be said for reducing redundancy and ambiguity.
These words are basic building blocks of contracts and have a long history. Each has traditionally had a distinct meaning and purpose. The key difference among these words is temporal – past and present for representations; past, present, but mainly future for warranties; and mainly future for covenants. The remedies for a false representation, breach of a warranty or violation of a covenant also have differed. Giving attention when drafting or editing a contract to their backgrounds and the traditional distinctions among them will promote clarity.
Representations
In traditional usage, a representation precedes and induces a contract. It is information by which a contracting party decides whether to proceed with the contract. A representation is an express or implied statement that one party to the contract makes to the other before or at the time the contract is entered into regarding a past or existing fact. An example might be that a seller of equipment represents that no notice of patent infringement had been received.
A representation traditionally was not part of a contract, and a claim for damages due to a misrepresentation generally would not be allowed. Instead, a claim that a misrepresentation induced a contract might be pursued in fraud, either to rescind the contract or for damages. In some instances, a claim might be based on the tort of negligent misrepresentation.
If a representation was included as part of a contract, it typically would function as a “condition” or “warranty.” A condition is a vital term going to the root of the contract (for example, that a lawyer hired under an employment agreement must be licensed to practice law), which, if the condition were false, would entitle the employer to repudiate the contract. In contrast, a representation in a contract might be a “warranty,” which would be an independent, subsidiary promise that did not go to the root of the contract (such as that the lawyer claims to always wear a suit to the office), and, if false, might give rise only to a claim for damages.
Warranties
Warranties generally are promises that appear on the face of the contract. They are important parts of the contract, requiring strict compliance. Warranties may include representations, agreements or promises that a proposition of fact is true at the time of the contract and will be true in the future. A warranty provides that something in furtherance of the contract is guaranteed by a contracting party, often to give assurances that a product is as promised. It often is equivalent in effect to a promise that the warranting party will indemnify the other if the assurances are not satisfied.
Warranties may be categorized as affirmative warranties, i.e., those that focus on assurances that certain facts are true or acts have been performed at the time of the contract, and promissory warranties, i.e., those that are agreements for the future. Either type of warranty entitles the protected party to damages for breach or to the particular remedies set forth in the contract. Damages are based on the difference between the value of contract as agreed upon compared to the value of the contract given the facts at the breach.
Warranties now commonly provide protection for consumer products, and are subject to the Uniform Commercial Code and federal law. An “extended warranty” protects beyond the initial agreement between a buyer and seller. It is a form of insurance and may be regulated as such depending on state law and the particulars involved.
Comparing Representations and Warranties
Justifiable reliance generally is an element for a misrepresentation claim, but the state of mind of the party to whom the warranty is given is not pertinent to a warranty claim, and a party may enforce an express warranty even if the beneficiary believes the warranty will be breached and the problem it covers will arise.
Traditionally, a warranty also differed from a representation in these ways: (1) a warranty was always part of a contract, while a representation usually was a collateral (or a separate) inducement prior to the contract; (2) a warranty was on the face of a contract, while a representation might be written or even oral; (3) a warranty was conclusively presumed to be material, while a party claiming a misrepresentation had to establish materiality; (4) a warranty had to be strictly complied with, while substantial truth was enough for a representation; (5) a contract remained binding if a warranty was breached (unless the warranty was also a condition that was vital to the contract, e.g., that the lawyer hired under an employment agreement was licensed); and (6) only damages were recoverable from a breach of warranty, while a party defrauded by a misrepresentation might in some circumstances rescind the contract or recover damages for fraud.
Covenants
A covenant in a contract traditionally has been a solemn promise in writing, signed, sealed and delivered, by which a party pledges that something has been or will be done or that certain facts are true. Historically, a covenant was in a sealed document that was self-authenticating, and witnesses were not required to establish the terms in the document. Of course, with the abolition of private seals over the last hundred years or more, contracts have been enforceable without being sealed documents.
Covenants usually are formal agreements or promises in a written contract, and are usually in agreements relating to real property. Covenants in or related to a contract usually are secondary to the main reason for the contract. They are an undertaking to do or not do something in the future; for example, that conditions will be maintained between the signing of a contract and the closing of the transaction, or while a loan is unpaid, or that a party will not compete or sue. A covenant – similar to a warranty – has always been part of the contract. A claim for breach of a covenant may be for damages or specific performance, or, potentially, if the covenant is important enough, for rescission or termination.
The Future
Dispensing with “representations,” “warranties” or “covenants” might be the norm for contracts in the future. Some commentators and model forms avoid the words, substituting “agree” or “obligate” or use “represent” to also cover “warrant.” Distinctions based on these terms have been important – perhaps to an excessive degree – in the past. Courts today are more willing than before to excuse formalism related to particular words, but it’s safe to warrant that archaic distinctions still matter in the digital age.
© 2009 Dykema Gossett PLLC.
National Law Review, Volume , Number 335
PRINTER-FRIENDLY EMAIL THIS ARTICLE DOWNLOAD PDF REPRINTS & PERMISSIONS
Advertisement
Advertisement
Advertisement
TRENDING LEGAL ANALYSIS
Businesses Administering COVID-19 Vaccine Are at Risk for Mishandling Biomedical Waste
By
Greenberg Traurig, LLP
Top Five Labor Law Developments for May 2021
By
Jackson Lewis P.C.
The Future of Washington's Water Banks
By
K&L Gates
New York-Based Pharmaceutical Company Slapped with $220,000 Civil Penalty for Discriminatory Hiring Practices
By
Norris McLaughlin P.A.
ALERT: New York Hits Key 70% Vaccination Metric; Reopening Rules Lifted
By
Mintz
EERE Announces Webinar On EERE FY22 Budget Request For Renewable Power
By
Bergeson & Campbell, P.C.
Alaska Supreme Court Cools Down Standard for Establishing State Law Wage & Hour Exemptions
By
Jackson Lewis P.C.
COVID-19 Changes Are Coming: What California Employers Can Expect – Q&A
By
Greenberg Traurig, LLP
Drafting a Non-Binary and Other LGBTQIA Lawyer’s Biography
By
Fishman Marketing, Inc.
Organics Advocates Dig In With Ninth Circuit Appeal Challenging Certification for Hydroponics
By
Sheppard, Mullin, Richter & Hampton LLP
TCPA Regulatory Update — Commission Signs Memorandum of Understanding with Australian Communications Authority
By
Mintz
50 State Map of MAC Laws – Can PBMs No Longer Rely on ERISA Preemption to Avoid Certain State Laws?
By
Foley & Lardner LLP
Advertisement
Advertisement
Advertisement
ANTITRUST LAW
BANKRUPTCY & RESTRUCTURING
BIOTECH, FOOD, & DRUG
BUSINESS OF LAW
ELECTION & LEGISLATIVE
CONSTRUCTION & REAL ESTATE
ENVIRONMENTAL & ENERGY
FAMILY, ESTATES & TRUSTS
FINANCIAL, SECURITIES & BANKING
GLOBAL
HEALTH CARE LAW
IMMIGRATION
INTELLECTUAL PROPERTY LAW
INSURANCE
LABOR & EMPLOYMENT
LITIGATION
CYBERSECURITY MEDIA & FCC
PUBLIC SERVICES, INFRASTRUCTURE, TRANSPORTATION
TAX
WHITE COLLAR CRIME & CONSUMER RIGHTS
LAW STUDENT WRITING COMPETITION
SIGN UP FOR NLR BULLETINS
TERMS OF USE
PRIVACY POLICY
FAQS
 
Legal Disclaimer
You are responsible for reading, understanding and agreeing to the National Law Review's (NLR’s) and the National Law Forum LLC's  Terms of Use and Privacy Policy before using the National Law Review website. The National Law Review is a free to use, no-log in database of legal and business articles. The content and links on www.NatLawReview.com are intended for general information purposes only. Any legal analysis, legislative updates or other content and links should not be construed as legal or professional advice or a substitute for such advice. No attorney-client or confidential relationship is formed by the transmission of information between you and the National Law Review website or any of the law firms, attorneys or other professionals or organizations who include content on the National Law Review website. If you require legal or professional advice, kindly contact an attorney or other suitable professional advisor.  
Some states have laws and ethical rules regarding solicitation and advertisement practices by attorneys and/or other professionals. The National Law Review is not a law firm nor is www.NatLawReview.com  intended to be  a referral service for attorneys and/or other professionals. The NLR does not wish, nor does it intend, to solicit the business of anyone or to refer anyone to an attorney or other professional.  NLR does not answer legal questions nor will we refer you to an attorney or other professional if you request such information from us. 
Under certain state laws the following statements may be required on this website and we have included them in order to be in full compliance with these rules. The choice of a lawyer or other professional is an important decision and should not be based solely upon advertisements. Attorney Advertising Notice: Prior results do not guarantee a similar outcome. Statement in compliance with Texas Rules of Professional Conduct. Unless otherwise noted, attorneys are not certified by the Texas Board of Legal Specialization, nor can NLR attest to the accuracy of any notation of Legal Specialization or other Professional Credentials.
The National Law Review - National Law Forum LLC 4700 Gilbert Ave. Suite 47 #230 Western Springs, IL 60558  Telephone  (708) 357-3317 or toll free (877) 357-3317.  If you would ike to contact us via email please click here.
Copyright ©2021 National Law Forum, LLC
×
FBtwtlinkhomerss
logoPublishAdvertisePublishing FirmsE NewsbulletinsLaw Student Writing ContestContact UsTerms of UsePrivacy PolicyJoin Our TeamSearchMost RecentWhat's TrendingAntitrust LawBankruptcy & RestructuringBiotech, Food & DrugBusiness of LawConstruction & Real EstateCybersecurity Media & FCCElection & LegislativeEnvironmental & EnergyFamily, Estates & TrustsFinancial, Securities & BankingGlobalHealth Care LawImmigrationInsuranceIntellectual Property LawLabor & EmploymentLitigationPublic Services, Infrastructure, TransportationTaxWhite Collar Crime & Consumer RightsE NewsbulletinsLegal Educational EventsNLR BlogSearchAbout the NLRNLR TeamPublishing FirmsE Newsbulletins201820192020NLR BlogContact UsTerms of UsePrivacy PolicySearchContact UsE NewsbulletinsPublishAdvertiseLaw Student Writing ContestSearchAntitrust LawBankruptcy & RestructuringBiotech, Food & DrugBusiness of LawConstruction & Real EstateCybersecurity Media & FCCElection & LegislativeEnvironmental & EnergyFamily, Estates & TrustsFinancial, Securities & BankingGlobalHealth Care LawImmigrationInsuranceIntellectual Property LawLabor & EmploymentLitigationPublic Services, Infrastructure, TransportationTaxWhite Collar Crime & Consumer RightsE NewsbulletinsLegal Educational EventsLaw Student Writing ContestNLR BlogContact UsSearchENEWSBULLETINS