Legal Blog

M&A Nugget: Preserving Fraud Claims

Every purchaser of a business wants to preserve its ability to seek compensation from the seller in the event of the seller’s misrepresentation of important information.  Purchasers typically require sellers to make many representations in the purchase agreement that the purchaser relies on.  The seller may ask that the purchaser agree to limit the seller’s representations to those that are set forth in the four corners of the purchase agreement.  This is known as a “Reliance Disclaimer”.  The problem with a general reliance disclaimer is that it could prevent a purchaser from recovering for seller misrepresentation or fraud outside of the four corners of the contract.  A purchaser should therefore either not agree to a reliance disclaimer or specifically carve out of the reliance disclaimer any fraud or misrepresentation.

 

 

If you have any questions about this or any other M&A issue,
please contact Glenn Solomon at gsolomon@offitkurman.com or 443-738-1522.

 

ABOUT GLENN D. SOLOMON

gsolomon@offitkurman.com | 443-738-1522

Glenn D. Solomon is a principal at Offit Kurman and has provided counsel to businesses and business owners for more than twenty-five years. He has extensive experience in the purchase and sale of businesses, structuring ownership agreements, and advising companies in financial distress.

 

 

 

 

 

ABOUT OFFIT KURMAN

Offit Kurman is one of the fastest-growing, full-service law firms in the Mid-Atlantic region. With over 130 attorneys offering a comprehensive range of services in virtually every legal category, the firm is well positioned to meet the needs of dynamic businesses and the people who own and operate them. Our ten offices serve individual and corporate clients in the Maryland, Delaware, New Jersey, and Northern Virginia markets, as well as the Washington DC, Baltimore, Philadelphia, and New York City metropolitan areas. At Offit Kurman, we are our clients’ most trusted legal advisors, professionals who help maximize and protect business value and personal wealth. In every interaction, we consistently maintain our clients’ confidence by remaining focused on furthering their objectives and achieving their goals in an efficient manner. Trust, knowledge, confidence—in a partner, that’s perfect.

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