Difference between representation and warranties

Representation Warranties

A representation, like a warranty, is a A warranty is a promise that a particular

statement of fact but is one which is made statement made is true at the date of the
during contractual negotiations in order to contract. A breach of warranty gives rise to a
induce another party to enter into a contract. claim for breach of contract – the main remedy
While representations are usually made prior to being an award of damages. To give an
the contract they are often repeated and example, in a contract for the sale of goods, a
therefore form the basis of a contract. warranty may be given about the condition, age
or history of the goods being sold. In a
software supply agreement, a warranty is
usually given that the software will be free
from material defects at the time it is delivered.

In Century Spinning & Manufacturing Co. In All India General Insurance Co. v. S.P.
Ltd. v. Ulhasnagar Municipal Council 1970 Maheshwari AIR 1963 Ori 217) it was held
SCR (2) 854 it was held that: that:
A representation that something will be done in Representations which are made on the basis of
the future may result in a contract (unless the a contract or on the terms of a contract are
law requires it) if the person to whom it is warranties.
addressed acts on the basis of such
representation.

In a case of Governor of Orissa State v. In case of All India General Insurance Co.
Shivaprasad Sahu (S.A No.4 of 1961) (AIR 1960 Mad 484)
the court observed “that innocent It was observed that in case of warranty,
misrepresentation does not cause avoiding a materiality or immateriality of the fact
contract unless the representation is made warranted signifies nothing. Its incorrectness
without reasonable ground” constitutes a defence o an action on the policy,
even though it be not material and be made in
 perfect good faith.

In RC Thakkar v. Gujarat Housing Board In  New Hearts Ltd v. Cosmopolitan

(AIR 1973 Guj 34) it was held that: Investments Ltd. ([1997] 2 BCLC 249)
Continue with the contract, claim performance   the share purchase agreement incorporated a
of the contract and restoration to the same clause which stated that: "It is hereby agreed
position he would have been in had the and acknowledged by the parties that the
representation been true. Such restoration may Warranties (. . .) are given by the Vendor
be in the form of damages. ( subject to matters fairly disclosed (with
sufficient details to identify the nature and
scope of the matter disclosed) in the Disclosure
Letter in respect of which matters the Vendor
shall have no liability to the Purchaser." It was
held that merely providing documents that
might bring the purchaser's attention to a
matter was insufficient and that the particular
breach must be expressly brought to the
attention of the purchaser.

In case of All India General Insurance Co. In case of Rogers v. Toni Home Permanent
[ AIR (1960 Mad 484)] Co. [ 147 N.E 2d 612,616 (Ohio 1958)]
The Court observed that in case of It was held that a warranty may be either
representation, the insurer can avoid the policy express, where there is a positive
only by proving that the statement is false and representation of fact that induces a
fraudulent or that it was false and material to prospective purchaser to buy, or implied ,
the risk. where, considering the relations between the
parties, the nature of the transaction and the
surrounding circumstances, a warranty is

imposed by operation of law.

"If consent was caused by misrepresentation or

by silence, fraudulent within the meaning of
Section 17, the contract, nevertheless, is not
voidable,  if the party whose consent was so
caused had the means of discovering the truth
with ordinary diligence"
In World Sport Group (India) Pvt. Ltd v.
The Board of Control for Cricket in India.
[Arbitration Petition No. 978 of 2010
decided on 20-12-2010 (Bom)]
  The Bombay High Court observed that the
mere placing of a document on record of a
company, society or other such organisation
does not lead to the conclusion that every
officer thereof had the means of discovering
the truth merely by virtue of the document
being on the records. It was surmised that what
constitutes ordinary diligence must depend on
the facts of each case.