The representations and warranties clause as an example of a legal transplant to Spanish Law

Abstract

Representations and warranties clauses are part of the Anglo-American contractual tradition. Unlike under the continental legal drafting technique, in which the synthetic method seeks to formulate general principles or criteria that comprise a wide spectrum of contractual situations, which not necessarily have been specified in the contract, the Anglo-American tradition is rather based on the analytical methodology, which tends to explicit a great number of specific contingencies that may arise. The use of an analytical list of representations and warranties in the Spanish legal context may pose some difficulties. This paper addresses the representations and warranties clause as an example of legal transplant into Spanish Law. First, we examine the functions of the representations and warranties clause, in particular its functions under English and Spanish law. Next, we analyze the authorship of the representations and warranties, their more common types and the system of contractual liability, paying special attention to qualitative, quantitative and temporal limitations. Also, the specific compensation agreement, the claims procedure, the constitution of possible guarantees and the M&A insurance are presented. Finally, we conclude that, under Spanish Law, the representations and warranties clause should not be understood so much as a liability agreement assumed for the lack of veracity, accuracy or completeness of certain assertions, but as a risk coverage agreement.