This month we continue our discussion of contractual non-reliance provisions. Under Delaware law, a prima facie claim for fraudulent misrepresentation requires the plaintiff to plead facts supporting an inference that, among other things, the plaintiff acted in justifiable reliance on the misrepresentation. In the context of private mergers and acquisitions, a buyer bringing a post-transaction fraud claim against the seller may be precluded from claiming reasonable reliance on any representations made by the seller outside the four corners of the contract if the agreement contained a clear “non-reliance provision.”
Such a provision, which is often included in acquisition agreements in private transactions, amounts to a representation by the buyer that it has made its investment decisions based on its own knowledge and independent investigation—without regard to anything the seller has said or not said—and/or that the buyer only relied on the specific representations contained in the parties’ definitive agreement.
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