Should Courts Enforce Contracts Induced by Lying?
The most recent issue of the Marquette Law Review includes a provocative article written by Professor Allen Blair of Hamline University Law School on contracts and fraud (92 Marq. L. Rev. 423). In the article, Professor Blair explores why courts tend to not enforce so called “no reliance” clauses in contracts, clauses in which one party disclaims any liability for fraudulent statements (which includes lies) made outside of the four corners of the contract.
According to Professor Blair, courts generally refuse to enforce no-reliance clauses on the grounds that it violates public policy to protect a person against his own fraud. While some courts have enforced no-reliance clauses, they have generally done so only after finding that the clauses were specifically negotiated, and only to the extent that they set out the precise representation on which the other party may not rely. Only a handful of courts have upheld no-reliance clauses without attaching these types of limitations.
While Professor Blair does not promote blind enforcement of all no-reliance clauses, he argues that courts should not ignore the numerous legitimate reasons why sophisticated parties in complex transactions might agree to a no-reliance clause.