Private M & A - Seller's Misrepresentation, Non-Reliance Clause and Remedy

• Non-Reliance Clause: Provision included in an acquisition agreement for the benefit of the seller, in which the buyer confirms that, except for the express representations contained in the "representations" section of the acquisition agreement, the buyer has not relied on any representations or other statements made on behalf of the target company or the seller or any of their representatives. But what about adding a "fraud exception" clause thereto? Is it logical? It seems fundamentally contrary to the very bargain struck among the parties---that the buyer agreed that it is not relying on any representations outside the four corners of the agreement. But in a hot auction deal, where the pressure to get the bid accepted by the seller is enormous and only a set of skinny reps are included in the form agreement, this exception might be the only effective way to protect the potential buyer. See also in FDG Logistics v. A&R Logistics, where a Delaware court held that a "no other representations" representation was not an effective disclaimer (to function as a non-reliance disclaimer). 
• Breach of Contract Claim:  Claim under the express indemnification provisions of the acquisition agreement for breaches of the contractual representations made by the seller in that acquisition agreement, which will be subject to all of the caps, deductibles, mini-baskets, survival limitations and other contractual limitations on indemnification that were negotiated by the seller in the acquisition agreement.
• Tort Claims for Fraud for Deliberate Misrepresentation: Presumably not subject to the contractual indemnification provisions; but see limitation of liability clause of the acquisition agreement. 

                1. The buyer may claim that the seller knew that certain of these representations were wrong and that the buyer, therefore, has the right to recover from the seller in tort for his having defrauded the buyer. The presence and absence of non-reliance clause is not relevant.

                2. The buyer may assert that certain statements made to it or certain documents delivered to it during the due diligence investigation of the target company's business were fraudulent, even though those statements and documents were not specifically covered by any of the seller's express representations in the acquisition agreement (e.g., financial projections slide deck provided but not covered by the acquisition agreement reps and warranties). The presence or absence of non-reliance clause is material for the buyer in seeking its remedy at least in Delaware and those states that follow Delaware's approach---the buyer's claim for fraud outside the contract will be dismissed because of the presence of the non-reliance clause because Delaware courts take the position that if the buyer brings a claim for fraud outside the contract after specifically representing that it relied only on the representations expressly included in the acquisition agreement, then the buyer's non-reliance representation was in fact a misrepresentation, and that should preclude the buyer from recovering on its fraud claim. A good non-reliance clause can actually protect the seller against successful tort claims for fraud outside the contract.