DealLawyers.com Blog

Francis Pileggi recently blogged about the Chancery Court’s decision in ChyronHego v. Wight, (Del. Ch.; 7/18), in which Vice Chancellor Glasscock laid out a roadmap for drafters on how to draft enforceable reliance disclaimers in acquisition agreements. Here’s an excerpt with some of the key takeaways:

– Delaware law allows parties to identify the specific information on which a party has relied, and forecloses reliance on other information.

– In order for an anti-reliance provision to be effective, it must be unequivocally clear. By contrast, “Standard Integration Clauses” without explicit anti-reliance representations, will not relieve a party of its oral and extra-contractual fraudulent representations.

– The court emphasized that in order for anti-reliance language to be enforceable, “the 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.” See footnote 55 and accompanying text.

– Delaware courts will not condone an anti-reliance provision that one attempts to use in order to: (1) protect a seller from liability for making false representations in a contract; or (2) avoid liability for knowledge that representations in a contract are false.

Also check out this recent blog from Weil’s Glenn West, which discusses ChyronHego & other recent Delaware case law and takes a deep dive into the actions that parties to a contract should take to ensure an enforceable anti-reliance provision.

– John Jenkins