Abstract:
In the past 15 years, Delaware courts have consistently allowed a sophisticated party to foreclose fraud claims based on extra-contractual misrepresentations using a disclaimer. However, a survey of the case law revealed that courts dismissed the fraud claims after finding that there was no reasonable/justifiable reliance on the alleged misrepresentation. I conclude that such a freedom to contract around fraud is fictitious. This is because there would be no fraud to start with when justifiable reliance is missing. Therefore, the courts were either right to dismiss the case when they could not find reliance or they decided on the facts prematurely. Either way, there would be no such freedom to contract around fraud.
Jiang, Hao, The Fictitious Freedom to Contract Around Fraud under Delaware Law (May 11, 2016).
First posted 2016-06-16 07:08:05
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