The Difference Between a Representation, Warranty, Covenant and Condition

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Vocabulary: The Difference Between a Representation, Warranty, Covenant and Condition

Representation. A "representation" is made to induce you into a contractual relationship. Failure of a representations to be true is generally a breach of a contact; if material, it may result in the ability to rescind the contract. Usually, a representation would be thought of as being made at a certain point in time, but it is possible for it to be ongoing. Usually one side is responsible for a representation to another (but there could be reciprocal representations).

Example: Representations regarding originality

Warranty. A "warranty" is an ongoing promise that a state of facts will be true. Failure of a warranty to be true is generally a breach of a contact. In many cases, the remedy for a breach of warranty (for sale of goods, etc.) would be an attempt to cure; and if cure is not possible, a refund. Usually a warranty is for a set period of time; if the facts become untrue in that period of time there is a breach. Usually one side is responsible for a warranty to another (but there could be reciprocal warranties).

Example: Warranty of performance

Covenant. A "covenant" is an promise to do an act (or, refrain from doing an act (a "negative covenant")). Failure of a covenant to be performed does not necessarily result in rescission, but could result in damages. Usually one side is responsible for a covenant to another (but there could be reciprocal covenants).

Example: Promise to deliver a manuscript

Condition. A "condition" is a statement about a set of facts, which if true or false has consequences. Failure of a condition to be true is not necessarily a breach, but can result in a consequence such as termination. A condition could be based on one or both sides' actions, or it could be based on an independent fact of which neither is capable of influencing.

Example: Termination at the end of five years.

Agreement. An "agreement" as contrasted to a covenant, is an agreement about a set of facts; it is a mutual understanding and therefore is not subject to breach as such. It could be thought of as a mutual covenant not to challenge a shared assumption. Neither side is per-se responsible if the "agreement" is contrary to actual fact, but they do agree to abide by it.

Example: choice of law

Sections of a license agreement can be divided according to the above classification:

Section Kind of Term
Grant Covenant with conditions (license = covenant not to sue to enforce IP right, conditional on specified use)
Delivery and Support Covenants
Payment Covenants
Representations and Warranties Representation or Warranty
Indemnification (for infringement?) Covenant based on Conditions
Termination Conditions
General Agreement, but could be anything
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