In FdG Logistics LLC v. A&R Logistics Holdings, Inc. Chancellor Bouchard of the Delaware Court of Chancery found that a seller’s disclaimer of extracontractual representations is not enough to preclude a fraud claim. A fraud claim can only be precluded if the buyer affirmatively states what it is relying on and that it is not relying on extracontractual representations.
The Court noted “we will not insulate a party from liability for its counterparty’s reliance on fraudulent statements made outside of an agreement absent a clear statement by that counterparty—that is, the one who is seeking to rely on extra-contractual statements—disclaiming such reliance”
The Court examined similar past decisions in Anvil Holding Corp., and Prairie Capital III, L.P. v. Double E Holdings Corp. The Court noted:
Here, similar to Anvil but unlike Prairie Capital, the critical language missing from Sections 5.27 and 10.7 of the Merger Agreement is any affirmative expression by Buyer of (1) specifically what it was relying on when it decided to enter the Merger Agreement or (2) that it is was not relying on any representations made outside of the Merger Agreement. Instead, Section 5.27 amounts to a disclaimer by the selling company (Old A&R) of what it was and was not representing and warranting. Moreover, the integration clause contained in Section 10.7 merely states in general terms that the Merger Agreement constitutes the entire agreement between the parties, and does not contain an unambiguous statement by Buyer disclaiming reliance on extra-contractual statements.