Document: Abry Partners V, L.P. v. F&W Acquisitions LLC, C.A. No. 1756 (February 14, 2006)
Buyer in the sale of a corporation sought to rescind the Stock Purchase Agreement (“SPA”) based on false statements contained within the agreement. The seller moved to dismiss, for failure to state a claim, based on a provision in the SPA that limited the seller’s liability for misstatements to the content of a fund established to pay such damages. The Court held that, to the extent that there was no intentional deception on the part of the seller, the buyer’s damages were restricted to the damages fund. Intentional “lies” by the seller, however, would be not be protected by contract.
The Court rejected the view of the Restatement (Second) of Contract § 195, that reckless misrepresentation should not be protected by contract.