When technology deals go bad and everyone starts pointing fingers, claims of fraudulent misrepresentation are often a weapon of choice for customers’ lawyers in suing vendors. We saw that in two recent cases involving world-renowned software- and services vendors.
To help preclude such customer claims, vendors should consider including a ‘no-reliance clause’ in their contracts. Such clauses typically say that the customer is not relying, and will not rely, on any representations by the vendor or its personnel outside the four corners of the contract and the materials referenced by the contract.
In theory, such a no-reliance clause should kill a customer’s ability to claim fraudulent misrepresentation. That’s because, to succeed in such a claim, the customer normally must prove, not only that the vendor made a material misrepresentation or omission, but that the customer justifiably relied on the misstatement. If the customer represented in the contract that it was not so relying, and promised that it would not so rely, then it’d be tough for the customer later to claim fraud without being guilty of misrepresentation itself.
Courts have often upheld such clauses. But if it looked like the vendor lied or cheated, a court might very well look for ways to disregard the no-reliance clause. See generally Allen Blair, A Matter Of Trust: Should No-Reliance Clauses Bar Claims for Fraudulent Inducement of Contract?, 92 Marquette L. Rev. 423 (2009).