Paradox of Presumptions: Seller Warranties and Reliance Waivers in Commercial Contracts

This Note examines the enforceability of seller warranties and reliance waivers in New York, focusing on commercial contracts between sophisticated parties. In recent years, enforcement of these clauses has changed dramatically, resulting in an asymmetry in the law:  Seller warranties are presumptively enforceable, but reliance waivers are presumptively unenforceable. This change has shifted the burden of persuasion from the buyer to the seller, thereby altering the contracting costs for the parties. This Note seeks to explicitly delineate the contours of this incongruity, proposes an information asymmetry hypothesis as a means of explanation, and tests this hypothesis against recent developments in New York law. Finally, this Note examines a sample of fifty commercial contracts that may give a preliminary indication of whether private parties are contracting around these new default rules, and if so, in what ways. The data indicate commercial parties are generally not contracting around the new rules, but that some aspects of their enforcement might be inefficient.