III. The Proposed Rule
While Whitehead argues that the default rules should favor an anti-sandbagging regime, the mere fact that the parties are not incentivized to bargain for a sandbagging or anti-sandbagging provision is not reason enough to upset the balance of the negotiated terms. The warranties are already negotiated between the parties, and are “part of the bargain between the parties.”[1]The parties have little incentive to renegotiate the same terms that they have already negotiated. To advocate for a default anti-sandbagging rule is to undermine the bargaining positions of both parties. Now, each party must not only negotiate for the terms of the deal, but also prove additional circumstances, reliance, in order to obtain the benefit of the bargain.
As opposed to treating all buyers as potential sandbaggers as Whitehead proposes,[2]the model rule should treat all parties as parties who negotiated the bargain at hand. New York framed the analysis as:
Once the express warranty is shown to have been relied on as part of the contract, the right to be indemnified in damages for its breach does not depend on proof that the buyer thereafter believed that the assurances of fact mad in the warranty would be fulfilled. The right to indemnification depends only on establishing that the warranty was breached.[3]
This view makes sure that the warranty is an expected term of the bargain, and at that point, holds the parties to it. As such, the language set forth by New York should be the model rule for all states.
Conclusion
Today, many states have not considered whether reliance should be required as an element of a breach of warranty claim. Those states that have are inconsistent, with each other, and over time, even with themselves.[4]Parties to a purchase/sale transaction have no way of knowing how the courts will treat a transaction.[5]At the same time, there is little incentive for either party to clarify the language ahead of time.[6]First, and foremost, consistency is needed in the form of a model rule for states to adopt. While one such proposal has been put forth, it marginalizes the negotiations parties already engage in within the transaction.[7]The language set forth by the New York courts treat the terms of the negotiation properly, while still allowing the parties to negotiate other standards if they so desire.[8]Such a rule would bring clarity to the chaos and allow for a reasonable default position moving forward.
[1] CBS, 553 N.E.2d at 1001.
[2] Whitehead, supra note 98, at 1103–04.
[3] CBS, 553 N.E.2d at 1001.
[4] Seediscussion supra Part II.
[5] *Id.*
[6] Seediscussion supra Part III.
[7] Seediscussion supra Part III.
[8] *Id.*