Corporate & Securities Law

?Asserts??Revisiting ?Represents and Warrants? Once More

By Ken Adams

Longtime readers of this blog will be aware of my hostility towards the phrase represents and warrants (and representations and warranties). Over the weekend I was reminded that I don?t include in the MSCD discussion (starting at 12.285) a point I make in my seminars. Here it is:

The only purpose that Acme represents and warrants serves is to indicate that Acme is making a factual assertion. You don?t need two words to serve that function?that?s why I recommend you say Acme represents.

But one could just as well say Acme asserts, and that would have the advantage of allowing you to use a word that, unlike represents, isn?t freighted with doctrinal baggage. You?d avoid the problem with represents?that a practitioner might object that if you say just Acme represents and the factual assertion turns out to have been inaccurate, the other party would be entitled to bring only an action for misrepresentation and not an action for breach of warranty. That?s clearly bollocks?pardon my French!?but having to explain as much takes time that could be better spent on other matters.

But I still can?t recommend that one use asserts to introduce an assertion of fact. A guiding principle in my writings is that the corporate bar is allergic to novelty. I stand a greater chance of having people pay some attention if I recommend that they drop one word in a traditional doublet, as opposed to my recommending that they drop the doublet entirely in favor of a novel alternative.

And those lawyers who can handle the novelty will probably still be nervous about the remedies implications of using asserts, and you?d still have to spend time assuring them that there aren?t any.

So I?m sticking with Acme represents over Acme represents and warrants and Acme asserts.

Incidentally, if you?d like to weigh in, I suggest that first you read the discussion in MSCD or, if you can?t get your hands on MSCD, this blog post and this article.

Full post as published by AdamsDrafting on November 03, 2008 (boomark / email).