Non-Reliance Clause: Meaning, Risks & Drafting

TL;DR: A non-reliance clause is a contractual provision in which the parties acknowledge that they are not relying on any representations, statements, or promises outside the four corners of the written agreement. These clauses are standard in M&A purchase agreements, financing transactions, and complex commercial contracts, serving as a contractual shield against fraud claims and extra-contractual liability. When properly drafted, a non-reliance clause works in tandem with an entire agreement clause to foreclose claims based on oral promises, informal communications, or marketing materials that preceded the signed deal.

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What Is a Non-Reliance Clause?

A non-reliance clause is a provision in which one or both parties expressly disclaim reliance on any representations, warranties, or statements that are not set forth in the executed agreement. The clause typically states that the non-relying party has conducted its own independent investigation and due diligence, and that it is entering into the transaction based solely on the representations and warranties contained in the agreement itself - not on anything said or written during negotiations, in management presentations, data room materials, or other pre-contractual communications.

The practical effect is significant. Without a non-reliance clause, a buyer who discovers post-closing that the seller made oral promises about revenue projections, customer retention, or regulatory status can potentially bring fraud claims based on those extra-contractual statements. A non-reliance clause is designed to cut off that avenue by establishing, as a matter of contract, that the buyer did not rely on anything outside the agreement. This shifts risk squarely onto the party that had the opportunity to negotiate for specific contractual representations but chose not to (or failed to) include them in the signed document.

Non-reliance clauses differ from entire agreement (or integration) clauses, though the two are closely related and often appear in the same section of a contract. An entire agreement clause establishes that the written agreement constitutes the complete understanding between the parties. A non-reliance clause goes further: it affirmatively disclaims reliance on extra-contractual statements, which has distinct legal significance in jurisdictions that allow fraud claims to survive an integration clause. Delaware courts, in particular, have drawn this distinction sharply, holding that an entire agreement clause standing alone may not bar fraudulent inducement claims, while a properly drafted non-reliance clause can.

The tension underlying non-reliance clauses is between two competing policy interests: freedom of contract (parties should be able to define the boundaries of their deal) and the deterrence of fraud (no one should be allowed to lie with impunity). Courts across jurisdictions have grappled with this tension, producing a body of case law that rewards precise drafting and punishes boilerplate.

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Why It Matters

Limits exposure to extra-contractual fraud claims: The primary function of a non-reliance clause is to prevent a counterparty from claiming it was induced to enter the contract based on oral statements, emails, slide decks, or other pre-signing communications. In M&A transactions, where extensive negotiations generate thousands of pages of correspondence, the risk of fraud claims based on stray statements is substantial.
Provides certainty about the scope of the deal: By establishing that the written agreement is the sole basis for the parties' bargain, a non-reliance clause brings clarity to what each party is responsible for. If a representation is not in the agreement, it is not part of the deal - full stop. This benefits both sides by reducing post-closing disputes about what was or was not promised.
Protects sellers and their advisors: Investment bankers, financial advisors, and management teams who present information during due diligence face personal liability risk if a buyer later claims reliance on statements made in presentations or Q&A sessions. A non-reliance clause in the definitive agreement insulates these individuals from claims that their informal statements induced the buyer to close.
Incentivizes thorough due diligence: When a buyer knows it cannot fall back on oral promises, it has a stronger incentive to conduct rigorous independent investigation and to negotiate for specific contractual representations covering the issues that matter most. This produces better-informed transactions and more complete agreements.
Strengthens the enforceability of contractual remedies: Many M&A agreements include carefully negotiated indemnification provisions with caps, baskets, and survival periods that allocate post-closing risk. A non-reliance clause reinforces this negotiated risk allocation by preventing an end-run through extra-contractual fraud claims that would bypass the agreed indemnification framework.

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Key Elements of a Well-Drafted Non-Reliance Clause

Explicit disclaimer of reliance: The clause must contain an affirmative statement that the non-relying party is not relying on any representations, warranties, statements, or information other than those expressly set forth in the agreement. Avoid passive or ambiguous language - use direct, active voice: "Buyer acknowledges that it is not relying on..."
Identification of disclaimed sources: Specify the types of extra-contractual communications being disclaimed: oral statements, written communications, presentations, projections, estimates, management discussions, data room materials, and any other information provided during negotiations or due diligence. The more specific the list, the harder it is for a court to find a gap.
Independent investigation acknowledgment: Include a statement that the non-relying party has conducted its own independent investigation and analysis, and that it is entering into the transaction based on that investigation and the representations and warranties in the agreement. This reinforces the factual basis for the non-reliance disclaimer.
Fraud carve-out (or its deliberate exclusion): In buyer-friendly agreements, the non-reliance clause will include an express carve-out for intentional fraud or willful misconduct with respect to the representations and warranties actually made in the agreement. In seller-friendly agreements, the clause may attempt to disclaim reliance even in cases of fraud, though courts in many jurisdictions will not enforce such a broad disclaimer.
Scope of protected parties: Specify who benefits from the non-reliance disclaimer - the seller, its affiliates, officers, directors, employees, agents, and advisors. Without this specificity, individuals who made extra-contractual statements may not be covered by the protection.
Waiver of claims language: The strongest non-reliance clauses include an express waiver of any claims (in contract, tort, or otherwise) arising from or relating to extra-contractual statements. This converts the non-reliance acknowledgment from a factual representation into an affirmative release of potential claims.
No implied representations disclaimer: State that no representations or warranties are being made except those expressly set forth in the agreement, and that the non-relying party disclaims reliance on any implied representations or warranties, whether arising by statute, common law, or custom.
Mutual or unilateral structure: Determine whether the non-reliance runs one way (typically buyer disclaiming reliance on seller's extra-contractual statements) or mutually. In most M&A deals, the clause is primarily buyer-facing, but mutual non-reliance provisions are common in joint ventures and commercial contracts.

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Market Position & Benchmarks

Where Does Your Clause Fall?

Seller-Favorable: Broad non-reliance covering all extra-contractual statements by seller and all of its representatives, no fraud carve-out (or a carve-out limited to intentional fraud with respect to express representations only), express waiver of all tort and equitable claims, and protection extended to seller's affiliates, officers, directors, employees, agents, advisors, and any other person. Bars claims based on projections, estimates, and forward-looking statements entirely.
Market Standard: Non-reliance on extra-contractual statements with a carve-out for claims of intentional fraud relating to the representations and warranties expressly made in the agreement. Protection covers the seller and its representatives. The buyer acknowledges independent investigation and agrees that the contractual indemnification provisions are the exclusive post-closing remedy for breaches of representations and warranties.
Buyer-Favorable: Narrow non-reliance limited to specific categories of information (e.g., projections and forward-looking estimates only), broad fraud carve-out preserving claims for any fraudulent misrepresentation whether in or outside the agreement, no waiver of tort claims, and the non-reliance does not extend to the seller's officers and directors in their individual capacity.

Market Data

According to the ABA Private Target M&A Deal Points Study (2023), approximately 85% of private company acquisition agreements contain an explicit non-reliance provision, up from 71% in 2014, reflecting the influence of Delaware case law on drafting practices.
Nixon Peabody's M&A survey data (2022) indicates that 78% of non-reliance clauses include a carve-out for fraud relating to the express representations in the agreement, while only 12% attempt to disclaim reliance even in cases of intentional fraud.
In public company mergers, non-reliance provisions appear in over 90% of definitive agreements, typically in the representations article alongside the entire agreement provision (based on Practical Law analysis of S&P 500 merger agreements, 2023).
The Delaware Court of Chancery's decisions in ABRY Partners and its progeny have been cited in over 200 subsequent opinions, making the enforceability framework for non-reliance clauses one of the most heavily litigated areas of Delaware deal law.
Approximately 65% of non-reliance clauses in middle-market M&A transactions (deal value $50M-$500M) extend protection to the seller's financial advisors and investment bankers, according to Bloomberg Law's transactional database (2023).
In leveraged finance transactions, non-reliance provisions appear in virtually all credit agreements and note purchase agreements, with borrowers disclaiming reliance on lender projections or financial models shared during the syndication process.

Sample Language by Position

Broad Non-Reliance: "Buyer acknowledges and agrees that, except for the representations and warranties expressly set forth in Article III of this Agreement, neither Seller nor any of its Affiliates, officers, directors, employees, agents, advisors, or representatives has made, and none of them is making, any representation or warranty whatsoever, express or implied, at law or in equity, with respect to the Company, its business, assets, liabilities, condition (financial or otherwise), prospects, or operations. Buyer disclaims reliance on any statement, representation, warranty, or information of any kind not expressly set forth in Article III, whether made by or on behalf of Seller or any other Person, including any statement made in any management presentation, data room, confidential information memorandum, or other document or communication. Buyer waives any claim against Seller and its Representatives arising from or relating to any such extra-contractual statement or information."

Market Standard: "Buyer acknowledges that, in making its decision to enter into this Agreement and to consummate the transactions contemplated hereby, Buyer has relied solely on its own independent investigation and analysis and on the representations and warranties expressly set forth in Article III. Buyer has not relied on any other representation, warranty, or statement of any kind made by or on behalf of Seller or any of its Representatives. Notwithstanding the foregoing, nothing in this Section shall limit Buyer's remedies with respect to claims based on intentional fraud by Seller in the making of the representations and warranties set forth in Article III."

Narrow/Buyer-Protective: "Buyer acknowledges that it has not relied on any projections, forecasts, estimates, or forward-looking statements provided by Seller or its Representatives in deciding to enter into this Agreement. Nothing in this Section shall be deemed to limit or restrict any rights or remedies of Buyer arising from (a) fraud or intentional misrepresentation by Seller, its officers, or its directors, whether or not relating to the representations and warranties set forth herein, or (b) any breach of any representation, warranty, or covenant set forth in this Agreement."

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Example Clause Language

M&A Purchase Agreement: "Buyer acknowledges and agrees that neither Seller nor any of its Affiliates or Representatives is making any representation or warranty whatsoever, express or implied, beyond those expressly given by Seller in Article IV of this Agreement, including any implied warranty of merchantability, fitness for a particular purpose, or non-infringement. Buyer hereby disclaims reliance on any representation or statement made by Seller or its Affiliates or Representatives that is not expressly set forth in Article IV, including any information contained in the Confidential Information Memorandum, management presentations, data room materials, financial projections, or any other documents or communications provided to Buyer in connection with the transactions contemplated by this Agreement. Buyer acknowledges that it has conducted its own independent investigation and analysis of the Company and its business and has had access to the personnel, properties, premises, and records of the Company for such purpose. Notwithstanding the foregoing, nothing in this Section 9.6 shall limit Buyer's remedies for claims based on Seller's intentional fraud in making the representations and warranties expressly set forth in Article IV."

Credit Agreement: "Each Lender acknowledges that it has, independently and without reliance upon the Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender further acknowledges that it will, independently and without reliance upon the Agent or any other Lender, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any related agreement, or any document furnished hereunder or thereunder. The Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial or other condition, or creditworthiness of the Borrower or any of its Affiliates."

Commercial Supply Agreement: "Purchaser acknowledges that it has not relied upon and is not relying upon any statement or representation made by Supplier or its agents regarding the Goods other than those warranties expressly set forth in Section 7 of this Agreement. Purchaser has conducted its own evaluation of the Goods and their suitability for Purchaser's intended purpose. All other warranties, whether express, implied, statutory, or otherwise, including warranties of merchantability and fitness for a particular purpose, are hereby excluded to the maximum extent permitted by applicable law."

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Common Contract Types

M&A purchase agreements: The most common and heavily negotiated context for non-reliance clauses. Buyers disclaim reliance on everything outside the seller's express representations, while negotiating carve-outs to preserve fraud claims. The clause is typically found in a standalone section near the end of the representations article or in the general provisions.
Credit and loan agreements: Lenders include non-reliance provisions to establish that each lender made its own independent credit decision and did not rely on the agent bank's analysis or other lenders' participation decisions. This is standard in syndicated lending.
Securities purchase agreements: Investors in private placements disclaim reliance on any information other than the offering memorandum and the express representations in the purchase agreement. These provisions serve dual purposes: protecting the issuer from fraud claims and establishing the investor's sophistication for securities law purposes.
Joint venture agreements: Partners disclaim reliance on each other's projections about the venture's financial performance, market opportunity, or business plan. Mutual non-reliance is more common in JV contexts than in M&A.
Real estate purchase and sale agreements: Buyers of commercial real estate frequently disclaim reliance on the seller's representations regarding condition, environmental status, zoning, or income projections, typically in conjunction with an "as-is" purchase provision.
Technology licensing and SaaS agreements: Licensees disclaim reliance on product demonstrations, benchmarks, or performance claims made during the sales process, with the vendor's express warranties in the agreement serving as the sole performance commitment.
Settlement agreements: Parties settling disputes include non-reliance provisions to prevent subsequent claims that the settlement was induced by misrepresentations made during negotiations.
Franchise agreements: Franchisees disclaim reliance on earnings claims or financial projections other than those included in the Franchise Disclosure Document, though FTC and state franchise laws may limit the enforceability of such disclaimers.

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Negotiation Playbook

Key Drafting Notes

Draft the non-reliance clause and the entire agreement clause as separate provisions: Delaware courts have consistently held that these serve distinct functions. An entire agreement clause integrates the deal but does not necessarily disclaim reliance. A non-reliance clause disclaims reliance but does not by itself establish integration. You need both, and each should be drafted with its specific purpose in mind.
Be explicit about the fraud carve-out: The single most negotiated element of any non-reliance clause is the fraud carve-out. Define precisely what type of fraud is preserved: intentional fraud only, or all fraud? Fraud in the express representations only, or fraud in any statement? By the seller entity only, or by individuals as well? Ambiguity here invites litigation.
Use both disclaimer and waiver language: A non-reliance clause that merely states "Buyer is not relying on" extra-contractual statements is weaker than one that also includes "Buyer waives any claims arising from" such statements. The disclaimer goes to the factual element of reliance; the waiver goes to the legal right to assert a claim. Use both for maximum protection.
Address the "fraud on the non-reliance clause" problem: A sophisticated buyer may argue that the seller fraudulently induced the buyer to agree to the non-reliance clause itself. Draft the clause to state that the buyer has been advised by counsel, that the non-reliance provision was specifically negotiated, and that the buyer understands the legal effect of the disclaimer. This creates a stronger evidentiary record against a "fraud on the clause" argument.
Consider carving out specific pre-contractual documents: In some transactions, the parties may want certain pre-contractual documents (such as a letter of intent or term sheet) to remain actionable. If so, identify those documents by name as exceptions to the non-reliance disclaimer.
Coordinate with the indemnification provisions: The non-reliance clause should work in harmony with the indemnification framework. If the agreement provides that indemnification is the exclusive post-closing remedy, the non-reliance clause reinforces that exclusivity by eliminating the most common alternative theory - extra-contractual fraud. Reference the exclusive remedy provision in the non-reliance clause for added coherence.

Common Pitfalls

Relying on an entire agreement clause alone: Many practitioners assume that a standard entire agreement or integration clause bars extra-contractual fraud claims. It does not, at least in Delaware, New York, and several other major jurisdictions. The Delaware Court of Chancery in ABRY Partners v. F&W Acquisition LLC (2006) held that an integration clause, without an explicit non-reliance provision, does not foreclose claims of fraudulent inducement based on extra-contractual statements. This remains a common and costly drafting error.
Boilerplate non-reliance language that does not match the deal: Copying a non-reliance clause from a form without tailoring it to the transaction creates gaps. If the buyer was provided with a confidential information memorandum, management presentations, and financial projections, the clause should specifically reference those materials. Generic disclaimers are less effective than specific ones.
Failing to address the scope of preserved fraud claims: A non-reliance clause with a vague fraud carve-out - such as "except in cases of fraud" - leaves open whether the carve-out applies to fraud in the representations, fraud in extra-contractual statements, or both. In Abry Partners, the court distinguished between fraud in the contractual representations (which a non-reliance clause cannot bar) and fraud in extra-contractual statements (which it can). Imprecise drafting of the carve-out defeats the purpose of the clause.
Ignoring the interaction with securities laws: In transactions involving the purchase of securities, federal and state securities laws may override contractual non-reliance provisions. Section 29(a) of the Securities Exchange Act of 1934 voids contractual provisions that waive compliance with the Act. A non-reliance clause in a securities purchase agreement should include a savings clause preserving claims under applicable securities laws to avoid an argument that the entire provision is void.
Overlooking state-specific enforceability limitations: Not all jurisdictions treat non-reliance clauses the same way. California courts have been more skeptical of provisions that purport to disclaim reliance on fraudulent statements, while Texas courts have been more receptive, particularly under the "contractual waiver of reliance" framework established in Forest Oil Corp. v. McAllen (Tex. 2011). A clause drafted for Delaware may not provide the same protection in California or the U.K.
Failing to bind affiliates and representatives: If the non-reliance clause protects only the seller entity but the alleged misrepresentations were made by the seller's investment banker or CFO in their individual capacity, the clause may not bar claims against those individuals. Extend protection explicitly to affiliates, officers, directors, employees, agents, and advisors.

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Jurisdiction Notes

U.S.: Delaware leads the development of non-reliance clause jurisprudence. In ABRY Partners v. F&W Acquisition LLC (Del. Ch. 2006), Vice Chancellor Lamb held that a properly drafted non-reliance clause can bar extra-contractual fraud claims, but cannot bar fraud claims relating to the express representations in the agreement itself - a party cannot contractually insulate itself from the consequences of its own lies within the four corners of the contract. In Kronenberg v. Katz (Del. Ch. 2004), the court found that the absence of a non-reliance provision meant the plaintiff's fraudulent inducement claim survived the defendant's motion to dismiss despite an entire agreement clause. New York courts take a similar approach, enforcing non-reliance clauses as a defense to fraudulent inducement claims where the clause is specific and the parties are sophisticated (see Danann Realty Corp. v. Harris, 5 N.Y.2d 317 (1959)). Texas recognizes a "contractual waiver of reliance" doctrine under Forest Oil Corp. v. McAllen (Tex. 2011), requiring clear and unequivocal language, arm's-length dealing, and a knowing waiver of fraud claims for the disclaimer to be effective.
U.K.: English law permits parties to limit liability for misrepresentation by contract, subject to the Misrepresentation Act 1967 section 3 and the Unfair Contract Terms Act 1977. Under section 3 of the Misrepresentation Act, a term excluding or restricting liability for misrepresentation is enforceable only insofar as it satisfies the reasonableness test. Courts have upheld non-reliance clauses between sophisticated commercial parties in negotiated transactions, viewing them as "basis clauses" that define the terms on which the parties contracted rather than exclusion clauses subject to UCTA (see Peekay Intermark Ltd v. Australia and New Zealand Banking Group Ltd [2006] EWCA Civ 386). However, the distinction between a "basis clause" and an "exclusion clause" remains contested, and the Law Commission has recommended reform in this area.
Other: In Australia, non-reliance clauses must be assessed under the Australian Consumer Law, which prohibits misleading or deceptive conduct and cannot be contracted out of in consumer transactions (though sophisticated commercial parties have more latitude). In Canada, non-reliance clauses are generally enforceable between sophisticated parties, but courts apply an unconscionability analysis and may decline enforcement where there is a significant disparity in bargaining power. Civil law jurisdictions such as France and Germany generally permit contractual limitations on reliance but subject them to good faith requirements and may not enforce disclaimers that purport to cover intentional or grossly negligent misrepresentation.

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Related Clauses

Entire Agreement - Establishes the written agreement as the complete expression of the parties' understanding. Works alongside non-reliance but serves a distinct function - integration versus disclaimer of reliance.
Representations vs Warranties - Non-reliance clauses define the boundary of what representations are actionable. Understanding the distinction between representations and warranties is essential to drafting an effective non-reliance provision.
Indemnification - Non-reliance clauses reinforce the exclusive remedy framework by preventing end-runs through extra-contractual fraud claims that would bypass negotiated indemnification caps and baskets.
Disclaimer Clause - Disclaimers of implied warranties and representations are closely related to non-reliance provisions and often appear in the same section of the agreement.
Material Adverse Change - MAC/MAE definitions and non-reliance clauses interact in M&A because the buyer's remedies for pre-closing deterioration are limited to the contractual framework, which the non-reliance clause helps enforce.
Warranty Disclaimer - Disclaims implied warranties (merchantability, fitness, etc.) and often accompanies non-reliance provisions to create a comprehensive limitation on the seller's extra-contractual exposure.
Good Faith - The implied duty of good faith and fair dealing may constrain the enforceability of non-reliance clauses in some jurisdictions, particularly where one party engaged in affirmative deception.

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This glossary entry is provided for informational and educational purposes only. It does not constitute legal advice, and no attorney-client relationship is formed by reading this content. Consult qualified legal counsel for advice on specific contract matters.