Source: http://barnespc.com/news-representations-warranties-breach-indemnification.php
Timestamp: 2019-04-19 10:17:31+00:00

Document:
With subtle hints that the economy is finally turning from its free-fall, merger and acquisition transactions will begin to surface once again. The preamble of many transaction documents includes various “representations and warranties”, provisions which may provide the parties with a foundation to detail certain facts and circumstances which found a transaction. Typically, the representations and warranties are promised to be true and correct when made and as of the closing, and will survive the closing. For example, under a stock purchase agreement, a seller may represent that “there are no claims, legal actions, suits, arbitrations or governmental investigations in progress or pending”. Representations will have reach well after the final signature is notarized at closing.
In Stone v. Denny (4 Metcalf, 151) it is said that the courts in their later decisions "manifested a strong disposition to construe liberally, in favor of the vendee, the language used by the vendor in making any affirmation as to his goods, and have been disposed to treat such affirmations as warranties whenever the language would reasonably authorize the inference that the vendee so understood it."
(2) It is not necessary to the creation of an express warranty that the seller use formal words such as “warrant” or “guarantee” or that he have a specific intention to make a warranty, but an affirmation merely of the value of the goods or a statement purporting to be merely the seller's opinion or commendation of the goods does not create a warranty.
In light of the long-term ramifications which result from representations and warranties, coupled with the fact that a good faith belief in the veracity of a representation is wholly irrelevant to defense of a breach of warranty claim, it is imperative that counsel work closely with clients to confirm the absolute accuracy of the same.
ii 51 N.Y. 198, at 201-202 (1872).
iii Metropolitan Coal Co. v. Howard, 155 F.2d 780, at 784 (2nd Cir. 1946). See also New York Contract Law 19:1.
iv CBS Inc. v. Ziff-Davis Pub. Co., 75 N.Y.2d 496, at 503, 554 N.Y.S.2d 449, at 452 (1990); Metropolitan Coal Co. v. Howard, 155 F.2d 780, at 784 (2nd Cir. 1946).
v CBS Inc. v. Ziff-Davis Pub. Co., 75 N.Y.2d 496, at 503, 554 N.Y.S.2d 449, at 452 (1990).
vi Municipal Metallic Bed Mfg Corp v. Dobbs, 253 N.Y. 313 (1930).
viii Ainger v. Michigan General Corp., 476 F.Supp 1209, at 1223 (S.D.N.Y. 1979).
ix CBS Inc. v. Ziff-Davis Pub. Co., 75 N.Y.2d 496, at 503-04, 554 N.Y.S.2d 449, at 453 (1990).
x Wechsler v. Hunt Health Systems, Ltd., 198 F.Supp.2d 508, at 522 (S.D.N.Y. 2002).
xi New York Contract Law 17:2 citing Carlisle Ventures, Inc. v. Banco Espanol De Credito, S.A., 1996 W.L. 680265 (S.D.N.Y. 1996).

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