This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
The term "warranty" is used in a variety of meanings. A comparison of the condition with the warranty, and a distinction between them, is therefore a comparison and a distinction of two terms, each of which is used in a variety of different meanings. As far as the term "warranty"' is used of a purely collateral agreement, the breach of which may give rise to a cause of action, but which has no effect upon the contract itself,1 there is as little danger of confusion between warranty in this sense and the condition, as there is between condition and any covenant.
In some cases, however, the term "warranty" is used of a promise as to the future, the breach of which, by the express terms of the contract or by necessary implication therefrom, is to operate as a discharge of the liability of the adversary party.2 The term "warranty" is frequently employed in this meaning in contracts of insurance.3 In cases of this sort the breach of the executory promise operates as a discharge of the contract, and for this reason such a promissory warranty is in legal effect a condition, if such effect is provided for by the parties. The term "warranty" is also used of representations as to past events on the truth of which the contract is conditioned.4 A warranty of this sort is as true a condition as any past event,5 if such effect is agreed upon by the parties.
13 See Sec. 2578.
14 See ch. LXXXIV.
1 Street y. Blay, 2 B. & Ad. 456; Thornton v. Wynn, 25 U. S. (12 Wheat.) 183, 6 L. ed. 595; H. W. Williams Transportation Line v. Darius Cole Transportation Co., 129 Mich. 209, 56 L. R. A. 939, 88 N. W. 473. See
2 Aetna Life Ins. Co. v. Davey, 123 U. S. 739, 31 L. ed. 315; Edwards v. Farmers' Mut. Ins. Asso., 128 Ga. 3.13, 12 L. R. A. (N.S.) 484, 57 S. E. 707; Fidelity & Deposit Co. v. Kane, 182 Ky. 648, 206 S. W. 888.
3 "In the law of insurance, as established and declared by judicial decision, a warranty is a statement of the contract with reference to the conditions on which it is predicated, the truth of which is made a condition to its validity; while a representation is a statement made as an inducement to a proposed contract of insurance and collateral to it. Warranties are of two kinds, affirmative and promissory. Affirmative warranties may be express or implied, and consist of representations in the policy of the existence of some fact or state of things at or previous to the time of making the policy. Promissory warranties may also be express or implied, but they usually have respect to the happening of some future event, or the performance of some act in the future. The distinction between affirmative and promissory or executory warranties is that the former represent the existence of certain facts or condition of things at the time when the policy is effected, and the latter represent that certain things shall exist during the continuance of the policy.
"An affirmative warranty is in the nature of a condition precedent, while a promissory warranty is in the nature of a condition subsequent, to the contract; and, whether affirmative or promissory, the effect of a breach thereof by the insured is to relieve the liability of the insurer, and this regardless, until the enaction of section 4572 of the code, of whether the matters warranted be material or not to the risk, and regardless of whether the insured acted in good faith or not in making the warranty. On the other hand, in order to avoid a contract of insurance for false representations or misrepresentations not amounting to warranties, which, as seen, are a mere inducement to the making of the contract, it must appear, or be made to appear, not only that the matters and things so represented are false, but also that they were material to the risk. A false representation or misrepresentation renders the policy void on the ground of fraud on the part of the applicant in procuring it, while a non-compliance with a warranty by him operates as a breach of the conditions of the contract. Quite frequently it is a difficult question, even for the courts, to determine whether a clause in a contract of insurance amounts to a warranty or only a representation." Metropolitan Life Ins. Co. v. Goodman, 10 Ala. App. 446, 449, 65 So. 449.