Slack V. South Carolina Law: Case Study

In Slack v. James,57 a case under South Carolina law, the trial court dismissed the buyer’s fraud claim finding, as a matter of law, that the buyer did not have the right to rely on the alleged oral statement by the seller’s agent because the written contract contained an express acknowledgement that the buyer had not received or relied on any statements or representation by the seller’s agent. The court of appeals held that the merger and disclosure provision in the contracts did not afford any protection to the sellers against allegations of fraud and negligent misrepresentation.58 The Supreme Court of South Carolina affirmed the court of appeals ruling because the non-reliance provision contained in the agreement lacked the required specificity.59 The court stated that a general non-reliance provision, just like a merger

The court adopted the buyer’s argument in part, holding that although sophisticated business parties have the freedom to contract out of a claim of rescission for unintentional contractual misrepresentations within a contract, “when a seller intentionally misrepresents a fact embodied in a contract—that is, when a seller lies—public policy will not permit a contractual provision to limit the remedy of the buyer to a capped damage claim. Rather, the buyer is free to press a claim for rescission or for full compensatory damages.”111 So the ABRY case held that in acquisition agreements with exclusive remedy provisions, (1) a seller who makes a representation cannot limit its own liability when that seller intentionally misrepresents a fact, or “lies”, and (2) a seller not making the offending representation will be liable when that seller “knew that the Company’s contractual representations and warranties were