Warranty or Misrepresentation?

Damages for breach of warranty are designed to put the claimant in the position it would have been in had the warranty been true, whereas damages for misrepresentation are designed to restore the claimant to the position it would have been in had the misrepresentation never been made.  In some cases, the same facts may support either a breach of warranty claim or a misrepresentation.  This issue is tricky since the measure of damages can be significantly different; monetary damages for breach of warranty. as opposed to rescission of an agreement for a misrepresentation

A warranty provision, generally precludes liability for representations since it would be incongruent to negotiate limitations on liabilities for warranties and remain liable without limitation for representations.  Moreover, in order to give rise to a misrepresentation claim, it is essential that a claimant be induced by the representation to enter into the contract.   This creates a timing problem because something that is contained in the contract (and therefore has no effect until the contract is signed) cannot be said to have caused a party to enter into the contract.

To be certain, warranty provisions should clear and unambiguous.  Add a stipulation that any misrepresentation claim based on a warranty is limited to an amount equal to the corresponding warranty claim.  And an express provision that the parties have not relied on any oral or written representation not contained in identified documentation and otherwise that waives any rights not conferred by the contract.

SHARE THIS: