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Delaware Court Holds Anti-Reliance Provisions Do Not Bar Fraudulent Inducement Claim

In Sofregen Med. Inc. v. Allergan Sales, LLC, 2021 Del. Super. LEXIS 319 (Super. Ct. Apr. 1, 2021), a Delaware Superior Court held that certain anti-reliance provisions in an asset purchase agreement did not bar a claim for fraudulent inducement based on fraudulent concealment. In the parties’ agreement, the buyer acknowledged that the seller did not make, and the buyer was not relying on, any representations or warranties other than those expressly contained in the parties’ agreement. The buyer, however, alleged that the seller represented during diligence discussions that one of its products had minimal adverse reactions, when in fact the seller concealed information showing serious adverse reactions, the result of which would significantly impact the seller’s “unduly optimistic revenue forecast predictions.” After the closing, the buyer brought a suit against the seller for fraudulent inducement based on the buyer’s fraudulent concealment of the adverse reactions. In response to a motion to dismiss, the court held that while the anti-reliance provisions in the parties’ agreement prohibited the buyer from relying on representations outside the agreement, the provisions did not disclaim fraud by concealment and, in turn, fraudulent inducement. As a result, the provisions did not bar the buyer’s claims.

For those representing sellers in transactions, it is critical to include strong anti-reliance provisions in the parties’ agreement. In Sofregen, the anti-reliance provisions included language that is typically seen in most purchase agreements. Practitioners should be wary that such language may not be enough.

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