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.
ABOUT GLENN D. SOLOMON
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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.
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