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Showing 2 posts in Merger Agreements.

Superior Court CCLD Holds that Anti-Reliance Clause Clearly Disclaimed Reliance on Extra-Contractual Representations or Implied Warranties

Posted In CCLD, Merger Agreements

Affy Tapple, LLC v. ShopVisible, LLC, C.A. No. N18C-07-216 (MMJ) (CCLD) (Del. Super Mar. 7, 2019).

In agreements governed by Delaware law, a standard integration or merger clause will not bar claims for misrepresentations made to induce entry into the contract.  In order to bar such claims, the agreement must include language expressly disclaiming any reliance upon extra-contractual statements.  While there are no “magic words” that are required, the language at issue must add up to a clear disclaimer.  Here, the Complex Commercial Litigation Division of Delaware’s Superior Court considered a clause stating the plaintiff agreed “that the limited express warranties set forth in this section … are exclusive” and that the defendant “specifically disclaimed all other representations and warranties, express or implied[.]”  The Court stated this was “more than a standard integration clause.”  Reasoning that “[l]anguage indicating a clear understanding of the parties’ intent is all that is required[,]” the Court concluded this section was “drafted with sufficient clarity to establish that there was an understanding that [the claimant] could not rely upon any implied warranties, or any express warranties outside of the [agreement].”  Therefore, the Court dismissed the plaintiff’s claim for fraud in the inducement based on alleged extra-contractual representations. 

Chancery Declines to Extend Rent-A-Center Merger Agreement, But Questions Request for Termination Fee

Posted In Merger Agreements

Vintage Rodeo Parent, LLC v. B. Riley Financial, Inc., C.A. No. 2018-0927-SG (Del. Ch. Mar. 14, 2019).

The merger agreement at issue in this case included provisions permitting extensions or terminations to account for potential closing delays.  Relevant here, the agreement allowed either party to terminate after a particular deadline if the other party had not timely exercised its right to extend the contract.  The target exercised that right to terminate after the acquirer inadvertently failed to extend.  This litigation ensued, with the acquirer making various equity-based arguments to prevent the target’s termination. More ›