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Non-reliance provision

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Quick Answer

A non-reliance provision states that the buyer relies only on the representations written into the agreement and not on anything else it was shown or told.1,2

What it is

It closes the gap between the data room and the contract, which is where extra-contractual misrepresentation claims otherwise live. Whether fraud is carved out of the provision is a separate and heavily negotiated question, and a non-reliance clause that also disclaims fraud is doing considerably more than it appears to.1,2

Operational context

What good looks like

Why It Matters

This is where a buyer's diligence stops being evidence. Anything material that came from a management presentation rather than from a representation has, after this clause, no contractual home.1

Related Questions

What is a non-reliance provision?

A non-reliance provision states that the buyer is relying only on the representations written into the agreement and not on anything else it was shown or told, which is what closes the gap between the data room and the contract.

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Frequently Asked Questions

What is Non-reliance provision in venture capital?

It closes the gap between the data room and the contract, which is where extra-contractual misrepresentation claims otherwise live. Whether fraud is carved out of the provision is a separate and heavily negotiated question, and a non-reliance clause that also disclaims fraud is doing considerably...

Why is Non-reliance provision important for startups?

Understanding Non-reliance provision is critical for founders navigating the fundraising process. It directly impacts deal terms, valuation, and the relationship between founders and investors.

Sources & References

  1. 1.T3-03 — Wagner HicksThe New Normal in Private M&A: Key Takeaways from the 2025 ABA Deal Points StudyWagner Hicks(A non-reliance provision states that the buyer relies only on the representations written into the agreement and not on anything else it was shown or told.)secondary · T3 · deal-documents · concept
  2. 2.T2-03 — ABA Business Law TodayAnnouncing the ABA's 2025 Private Target M&A Deal Points StudyABA Business Law Today(A non-reliance provision states that the buyer relies only on the representations written into the agreement and not on anything else it was shown or told.)primary · T2 · deal-documents · concept

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