he Difference Between a Representation, Warranty, Covenant and Condition
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 |
