Merger Clauses

I. INTRODUCTION

Many judges and scholars seem to the rules assigning liability for fraud-and sometimes even negligence-in contract formation to be among the few mandatory rules of the contracting game.

This belief persists in spite of the fact that virtually every other rule of contract law is treated as a default rule, and therefore, subject to modification by agreement of the parties. Disclaimers of liability for pre-contractual misrepresentations are common features of all kinds of contracts, ranging from the complex agreements of purchase and sale used in connection with the acquisition of businesses, to contracts for the sale or the lease of consumer goods. However, consistent with the view that the rules against fraud and negligence are mandatory rules, a number of courts have refused to give effect to these kinds of disclaimers in cases involving allegations of fraud or negligent misrepresentation, even when they are contained in contracts between relatively sophisticated parties.