Reliance is a necessary element of fraud, fraud by nondisclosure, which is a subcategory of fraud, fraudulent inducement, and negligent misrepresentation. A plaintiff establishes reliance by showing that the defendant’s acts and representations induced him to either act or refrain from acting, to his detriment.
In Forest Oil Corp. v. McAllen, the Texas Supreme Court stated that a disclaimer of reliance on representations, where the parties’ intent is clear and specific, should be effective to negate the element of reliance. The Court stated that “parties who contractually promise not to rely on extra-contractual statements—more than that, promise that they have in fact not relied upon such statements—should be held to their word.”
When knowledgeable parties expressly discuss material issues during contract negotiations, but nevertheless elect to include a waiver-of-reliance provision, courts will generally uphold the contract. An all-embracing disclaimer of any and all representations shows the parties’ clear intent. The court held that if disclaimers of reliance cannot ensure finality and preclude post-deal claims for fraudulent inducement, then freedom of contract, even among the most knowledgeable parties who were advised by the most knowledgeable legal counsel, is grievously impaired.”
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