Digital, Commerce & Creative 101: “Warrants”, “represents”, “undertakes” – are you using them correctly?

These terms can give rise to confusion, and a lawyer might feel the heat if asked to explain the differences between these terms and rationalise each of their uses in English law, particularly if there’s no textbook (*Chat GPT) nearby and it’s been a few years since contract law seminars at law school. This 101 article provides a quick reminder of the meaning of each term and the consequences of breach. 

First, how the parties designate a provision (e.g., as a warranty or a representation) is not always conclusive – whilst express agreements will generally be upheld, the courts will, if necessary, look to the substance of the provision and enforce it accordingly. 

1. “Warrants”

• What is a warranty? This is a promise that a present fact or circumstance is true. Some warranties are implied into a contract by statute (for example, where a business sells goods, the Sale of Goods Act 1979 implies the term that the goods supplied are of merchantable quality).
  
  Despite the facts that warranties classically relate to present facts or circumstances, they are often given in commercial agreements as statements of future facts. This brings them closer to undertakings, although the remedies available for breach of each term are different (see below).
  
  
• What is the effect of it being breached? A breach of warranty gives the claimant the right to damages for any loss suffered. It does not give a claimant the right to terminate under common law, although the parties may contractually agree that a breach (or, more likely, a material breach) of a warranty gives rise to a right to terminate. A warranty differs from a “condition”, which is a less common term that describes provisions that go to the heart of the contract and that, if breached, do afford a claimant the right to terminate under common law. For this reason, use “conditions” carefully. 

2. “Represents”

• What is a representation? Like a warranty, a representation is a statement of fact, although this time it’s made by one party to induce the other to enter into a contract. A representation can be distinguished from “sales puff” or “puffery” that a reasonable person would know is not a statement of fact.  
  
  
• What is the effect of it being breached? If a representation is untrue, it amounts to a “misrepresentation”. A claimant can make a contractual claim for misrepresentation and/or a claim for: 

• Fraudulent misrepresentation in tort at common law – this is where the representor made the misrepresentation knowingly and recklessly as to the truth.  
• Negligent misrepresentation under the Misrepresentation Act 1967 – this is where the representor made the misrepresentation without care or without reasonable ground for belief in its truth.  
• Innocent misrepresentation under the Misrepresentation Act 1967 – this is where a representor had reasonable grounds for believing in the truth of the misrepresentation.

The law on misrepresentation is complex. A successful action for misrepresentation might enable the claimant to rescind the contract (aka render it null and void and put the parties back into the original position as if the contract hadn’t been entered into) and/or claim damages, depending on the facts and the nature of the misrepresentation.

A lawyer might also consider using qualifying drafting (e.g., that a representation (or warranty) is true “to the best of the [seller]’s knowledge” and/or “in all material respects”), thereby softening the assertion of fact.

3. “Undertakes”

• What is an undertaking? An undertaking is a promise to do something in the future. It has no particular significance in commercial contracts compared to a simple obligation on a party to do something (“the Supplier shall/will”), although it does have a specific meaning in specific legal areas such as where a solicitor gives an undertaking to another solicitor. In a finance law context, an undertaking might be referred to as a covenant.
• What is the effect of it being breached? As with a warranty, a breach of an undertaking gives the claimant the right to damages for any loss suffered.  However, unlike a warranty, the breach of an undertaking may also give rise to a claim for specific performance and injunctive relief. If the breach is serious enough, the claimant may also claim that the contract has been repudiated. As a reminder, a repudiation is a breach of contract that is a ‘condition’ or which deprives the other party of substantially the whole benefit of the contract, entitling them to terminate the agreement.
   

The differences between each of these terms are important and can have a significant effect on the remedies available to a claimant. Whether a lawyer will carefully unpick which terms should apply or choose the “more the merrier” approach will therefore often turn on whether it is their client giving or receiving the comfort/assurance – if receiving, they will want the remedies available to them to be as broad as possible, but if giving, as narrow as possible.

Whichever side you are on, think about what you are looking to achieve and select the correct term with intent. That assessment should include whether the comfort being given or received relates to something in the past, present, or future and the type of remedy that should be available for breach.