QUICK NOTE: CAN A PARTY DISCLAIM LIABILITY IN THEIR CONTRACT TO FRAUD?

It is possible for a party to contractually disclaim or otherwise foreclose liability to a fraud claim.  However, let’s be honest.  It can be done, but rarely is and would require very specific language to EXPLICITLY disclaim or foreclose such liability to a fraud claim.

A recent case, discussed here, exemplifies this point where as-is language in a purchase-and-sale agreement was NOT specific to contractually foreclose or disclaim liability to a fraud claim.

For a party to contractually waive a fraud claim, there needs to be an express waiver of liability for fraud that might have been made and that any fraudulent misrepresentation, if such fraud was committed, was disclaimed and would not destroy the validity of the parties’ contract.

Without the right contractual disclaiming language, a fraud claim can survive a motion to dismiss and, potentially, even a summary judgment.  While the failure to include the disclaiming language will not go to the merits of the fraud, what it will do is preclude a claim from being dismissed purely because of contractual language.

On the other hand, with the right disclaiming language, the fraud claim may never see the light of day.

Check out the article on the recent case to understand what a party MUST include in their contract to contractually disclaim or foreclose liability to a fraud claim.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

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