Substantive Legal Content

Introducing The Dumbies

Lawyers are avid fans of awards, so much so that they sometimes even pay to get them, which is a topic for another day.

I was thinking (because I have time to do that now that I am retired) that perhaps we should create a new award program which we could call the “Dumbies.”  We can award a prize for the dumbest clauses that lawyers regularly insert into commercial agreements.

I would like to put forward the very first nomination, and that would be the representation and warranty that is included in just about every share purchase agreement to the effect that the agreement has been duly authorized, executed and delivered by the vendor and is binding upon the vendor.

It always struck me that if the agreement was in fact binding on the vendor, then the clause was completely unnecessary. On the other hand, if the agreement was not in fact binding on the vendor, then that representation and warranty was not binding either since it was part of the agreement.

I suspect that someone smarter than me knows why I am wrong about this. After all, thousands of lawyers insert this provision in agreements every day.

So, does the clause deserve a Dumbie, or am I the Dumbie?

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