What is a warranty clause? This provision in a contract refers to the facts or matters being presented in the agreement terms.

What Are Representations and Warranties in a Contract?

Most people are familiar with warranties, which often come with products in the marketplace as a way to protect the consumer from a product that malfunctions within a certain period of time. All contracts include warranties and representations, which are the underlying facts or matters that are presented in the contract terms. Under the laws that pertain to contracts, the word “warranty” has several meanings. The most common meaning is a promise or guarantee, providing assurance by one party to another party that conditions or facts outlined in an agreement are accurate or will take place.

Regardless of the materiality, this guarantee can be legally enforced, and the remedy promised can be obtained if one party doesn't deliver on its promise. According to the definition in Black's Law Dictionary, representation refers to the statement made by one of the parties involved in a contract to the other party, either at the time of entering into the agreement or before, relating to a state of facts, single fact, or circumstance in the contract. This statement holds influence in the overall agreement.

The statements made by the parties to induce one another into entering into a contractual relationship are the representations, while the warranties include the promises made by each party that will benefit the other in the agreement. Representations often include statements from the past to the present. A warranty outlines terms for the present through the future.

A warranty might be implied or expressed. If a warranty is implied, it would fall under the Uniform Commercial Code. This code outlines that all goods sold have some type of fitness for a specific purpose. An expressed warranty refers to a promise that is specifically written into the contract. A buyer should insist upon an expressed warranty when entering into an agreement.

In contracts, for most purposes except commercial items, the express warranties included would negate any implied warranties under the Uniform Commercial Code. By using specific language to spell out the express warranty, the implied warranty applies, based on several clauses in the code:

  • Warranty of Supplies of a Noncomplex Nature (52.246-17)
  • Warranty of Systems and Equipment under Performance Specifications or Design Criteria (52.246-19)
  • Warranty of Supplies of a Complex Nature (52.246-18)

If a contract includes references to both warranties and representations, the terms combine the past, present, and future.

What Am I Promising When I Sign this Contract?

If a contract is related to entertainment rights, the seller of those rights is the one making most of the warranties and representations. The first representation is who will own any rights being shared or sold in the agreement. The second is the idea that the seller holds the authority and right to sell or share their rights. This means that no previous commitments exist that restrict the seller from offering these rights, nor is the seller prevented or prohibited from entering into an agreement.

Most contractual agreements require the seller to represent and warrant that what they are trying to sell isn't already available in the public domain, which means it is free for use by members of the public. The seller must make a representation that using the material doesn't infringe on any property rights of another company or person, including those under copyright, patent, and trademark laws. The use of the material should not be defamatory toward another, nor should invade the privacy of another.

The final warranty and representation made by the seller is that no claims, liens, or other encumbrances on the rights or property that is being sold. A product should be free of defects and the company or individual selling it should provide a warranty that covers the product for a specific amount of time.

During that time, the seller is warranting that any defects would be repaired at no charge to the buyer. A product may even come with a warranty that lasts for its life.

Are These Terms Negotiable?

The representations and warranties in a contract may be negotiable to a certain extent, although it depends on the parties involved in the agreement.

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