The recent decision of ChyronHego Corporation v. Wight, C.A. No. 2017-0548-SG (Del. Ch. July 31, 2018), provides helpful guidance regarding the effectiveness of anti-reliance provisions in a contract.
ChyronHego clarifies that in order for the anti-reliance provision to be effective under Delaware law,
[T]he contract must contain language that, when read together, can be said to add up to a clear anti-reliance clause by which the plaintiff has contractually promised that it did not rely upon statements outside the contract’s four corners in deciding to sign the contract.
Slip op. at 12. On the other hand, the Court clarified that Standard Integration Clauses without explicit anti-reliance representations, will not relieve a party of its extra-contractual fraudulent representations. Id.
Here, plaintiffs asserted claims of fraud arising from a corporate acquisition, alleging that defendants fraudulently misrepresented the actual condition and value of the company. Vice Chancellor Glasscock found that the stock purchase agreement (“SPA”) at issue unambiguously barred prior extra-contractual fraud. This was so given the unambiguous anti-reliance provision contained in the SPA, together with the SPA’s integration clause, exclusive remedies clause, a clause defining excluded liabilities, and an indemnification provision.
As such, the Court dismissed those claims in the complaint alleging extra-contractual fraud in connection with the SPA.
Carl D. Neff is a partner with the law firm of Fox Rothschild LLP. Carl is admitted in the State of Delaware and regularly practices before the Delaware Court of Chancery, with an emphasis on shareholder disputes. You can reach Carl at (302) 622-4272 or at email@example.com.