The Latest from Glenn West on No-Reliance Language

Glenn West blogs. He has also grown a hipster beard and moved to Brooklyn.

Actually, that last bit isn’t true. But he did recently contribute this post to Weil Gotshal’s Global Private Equity Watch blog.

It’s about the recent decision of the Delaware Court of Chancery in FdG Logistics LLC v. A&R Logistics Holdings, Inc., to the effect that a disclaimer of reliance on extra-contractual statements of fact will be enforceable only if the buyer makes it,  not the seller.

Glenn is my preferred source for no-reliance information. Another of his tips prompted this post from a few months ago about another Delaware decision.

While I had Glenn’s attention, I mentioned that when he writes about disclaimers of reliance, it’s in the context of M&A. Are they also relevant for purposes of commercial contracts generally? Here’s what he said:

Yes, most definitely. My own unscientific and statistically indefensible survey of cases suggests that almost any contract capable of being breached is capable of being alleged to have been entered into based on fraud of some kind or the other. Whenever the contract provides insufficient relief for the harm supposedly inflicted to the aggrieved counterparty, that counterparty uses the realm of tort to supplement the realm of contract. So, a supply or service agreement easily could have the exact same issues as a M&A transaction in the area of fraud claims, particularly when the contractual remedy is capped at a certain dollar amount or by certain damages types.

That’s something I’ll pay more attention to.

Now, I can hear you shouting, “Adams, you a**hole, give us your no-reliance language!” Back off! You can find it in this 2012 post, tailored for a confidentiality agreement, based in part on input from … Glenn, of course. It would be simple to adjust it to make it fit other kinds of transactions.

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 “The Latest from Glenn West on No-Reliance Language”

  1. I wonder whether release would work as well as disclaimer:

    ‘The Buyer hereby releases the Seller from any claims by the Buyer, in tort or otherwise, arising from the Buyer’s reliance on any [Confidential Information or other] pre-signing extracontractual statements attributable to the Seller’.

    In that approach, a cap would become a carve-out: ‘This release will not apply to claims of X or less’.

    I like the release approach because it doesn’t involve possibly inaccurate denials of the existence of extracontractual statements by Seller or reliance on them by Buyer. It just kills or limits Seller’s liability for such statements or reliance.


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