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Court of Chancery Addresses Effect of Typical Merger Agreement Provision

Posted In M&A

Case Financial Inc. v. Alden, C.A. 1184-VCP (August 21, 2009)

This decision is of interest because it explains the effect of a common merger agreement provision that is often misunderstood. It is common for such an agreement to say that representations expire at a certain date, such as the merger date. What does that mean? Some would argue it means that any claim for misrepresentation ends that day. That is not correct.

As this decision explains, this language only means exactly what it says-the representation of a fact ends on that date and the facts may change afterwards. A claim for fraud or misrepresentation may still be filed later.

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