Understanding the Difference between Representation and Warranty in Contracts

Difference Between Representation And Warranty In Texas

In contract law, the terms "representation" and "warranty" are often used interchangeably, leading to confusion about their meanings and legal implications. This article aims to clarify the distinction between the two concepts and provide a legal overview of warranties in contracts.

Black's Law Dictionary defines "warranty" as "an express or implied promise by one of the contracting parties to guarantee something in furtherance of the contract, especially a seller's promise that the thing being sold is as represented or promised." Black's Law Dictionary 1618 (8th ed. 2004). In contrast, Black’s defines “representation” to be: “A presentation of fact – either by words or by conduct – made to induce someone to act, especially to enter into a contract; especially, the manifestation to another that a fact, including a state of mind, exists.” Black's Law Dictionary 1327 (8th ed. 2004).

In the context of the sale of goods, an express warranty is usually written on the face of the contract, while a representation may be written or oral. A warranty is conclusively presumed to be material, whereas the burden is on the party claiming breach to show that a representation is material. Moreover, a warranty must be strictly complied with, while substantial truth is the only requirement for a representation.

Case law in Texas has held that a "warranty" is an expressed or implied statement of something that a party undertakes to be part of a contract but that is collateral to the expressed object of it. Great Atlantic & Pacific Tea Co. v. Walker, 104 S.W.2d 627, 632 (Tex. Civ. App.— Eastland 1938), rev’d, 112 S.W.2d 170 (Tex. 1938). In a sale of goods, a "warranty" signifies an independent, subsidiary promise collateral to the main object of the contract, a breach of which gives rise to a claim for damages. Whiddon v. General Mills, Inc., 347 S.W.2d 7, 10 (Tex. Civ. App.—Fort Worth 1961, no writ).

Furthermore, an expressed warranty is a definitive affirmation of fact or promise that becomes part of the basis of the bargain, and upon which the parties rely. The test of whether a salesman's statements constituted these "affirmations of fact" going to the very "basis of the bargain," so as to create an expressed warranty, is whether the salesman was asserting a fact of which the buyer was ignorant, or whether the salesman was merely declaring his belief with reference to a matter of which he had no special knowledge and of which the buyer might also have been expected to have an opinion. Valley Datsun v. Martinez, 578 S.W.2d 485, 490 (Tex. Civ. App.—Corpus Christi 1979, no writ) (construing TEX. BUS. & COM. CODE ANN. §§2.313 and 17.50(a)(2)).

In conclusion, understanding the difference between representation and warranty is critical in contract law. A warranty is a guarantee of a product's quality or condition, while a representation is a statement of fact or opinion that may induce a party to enter into a contract. When drafting contracts, it is important to be clear about the warranties and representations made to avoid confusion and potential litigation down the line.

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