Commercial Division Blog

Posted: July 29, 2015 / Categories Commercial, Contracts, Fraud/Misrepresentation

No Fraudulent Inducement Claim When Contract Disclaims All Non-Contractual Representations

On July 15, 2015, the Second Department issued a decision in Oseff v. Scotti, 2015 NY Slip Op. 06123, holding that a claim for being fraudulently induced to enter into a contract failed when the contract explicitly disclaimed all non-contractual representations.

In Oseff, the plaintiffs brought actions relating to "recover damages for breach of contract" and "to recover on a promissory note and personal guaranty." The trial court granted the defendants' summary judgment on the plaintiff's claim of fraudulent inducement, a decision the Second Department affirmed, explaining:

While a general merger clause is ineffective to exclude parol evidence of fraud in the inducement, a specific disclaimer destroys the allegations in a plaintiff's complaint that the agreement was executed in reliance upon contrary oral misrepresentations. In support of this branch of their motion, [the defendants] relied upon the contract, which provides that [they] made no representation or warranty, either express or implied, as to the assets sold, [their] business, or any matter or thing affecting or relating to this agreement, except as specifically set forth in this agreement. The contract also indicates that it contains all of the terms agreed upon between the parties and that it was entered into after full investigation. Such clauses are sufficiently specific to bar the [plaintiffs] from claiming that they were fraudulently induced into entering the contract because of certain oral misrepresentations.

(Internal quotations and citations omitted) (emphasis added).