Glenn West’s New Article on Fraud Carve-Outs in Acquisition Agreements

Longtime readers of this blog will be familiar with Glenn West. His articles on extra-contractual liability (here), consequential damages (here), and “no recourse against others” provisions (here) are all essential reading for anyone serious about understanding those topics.

Well, break out the champagne, because Glenn has a new article out. This time it’s on fraud carve-outs in acquisition agreements; go here for a copy. I haven’t yet read it, because I find that reading a Glenn West article requires a suitably focused state of mind. That takes some preparation; perhaps a week in a Buddhist monastery. I look forward to tackling this article in the coming months.

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.

1 thought on “Glenn West’s New Article on Fraud Carve-Outs in Acquisition Agreements”

  1. Interesting article. It appears that there are real issues under US laws. I am less convinced by the praying in aid of an English case to support the argument that similar issues arise under English law. The case cited, Cavell, does not make me want to change my general carve out for fraud wording in limitation of liability and entire agreement clauses. Glenn West suggests:

    “In light of these subsequent case law developments, and the holding of Cavell USA suggesting that an express fraud carve-out includes more than just truly fraudulent misrepresentations, one would think that our English colleagues would begin to change market practice and cease the use of generalized fraud carve-outs. But old habits die hard.”

    I disagree with this statement for the following reasons:

    (1) This case was a trial of some limited, preliminary issues, and was at first instance. I wasn’t aware of it until I saw the article, and having read the relevant parts of the judgment, I am not suprised that I wasn’t aware of it, because I don’t think it has made any significant changes to English law.
    (2) The sense of the judgment is that fraudulent misrepresentation covers the vast majority of instances of “fraud”. The court was giving itself some breathing room to decide that fraud was wider than fraudulent misrepresentation, ie in exceptional cases, not opening the concept up generally in a similar way to US law.
    (3) In the absence of some specific scenarios where English law would treat a fact pattern as fraud and yet where reasonable business people would regard it as appropriate to limit or exclude liability, why would one make a significant change to standard boilerplate language? Particularly based on one case with unusual facts concerned with conflict of laws between the UK and US.

    A more general point is that the drafter of clauses dealing with limitation of liability or entire agreement issues needs, in my view, to understand and take account of the relevant law. Clear drafting only gets you so far.


Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.