A no-reliance clause records that a party has not relied on certain statements when entering an agreement. In a business sale, it may say that the buyer relies on the agreed warranties rather than statements made outside the contract.
For the seller, it can help define the contractual basis of the deal. It should not be treated as a complete shield against a claim about what was said or supplied before signing.
What does the wording need to address?
Check which statements the clause covers, who made them and which statements remain protected by the agreement. Read it with the warranties, disclosure letter and any entire-agreement clause.
The provisions should tell a consistent story. A broad no-reliance clause alongside a warranty that repeats the same representation may leave the risk allocated differently from what the heading suggests.
What are its limits?
Section 18 of the Australian Consumer Law addresses misleading or deceptive conduct in trade or commerce. A no-reliance clause is not a reliable shortcut around that issue. The statements, conduct, contract and surrounding circumstances need to be considered together.
The Australian Consumer Law and the High Court’s decision in Butcher v Lachlan Elder Realty provide background on why context and the effect of a disclaimer matter. That decision concerned an agent’s brochure, rather than a business-sale no-reliance clause.
What should a seller check?
- Are forecasts, presentations and answers to buyer questions accurate and appropriately qualified?
- Does the agreement identify which information is warranted?
- Is the disclosure process consistent with the statements being made?
- Have the proposed exclusions and exceptions been reviewed together?
If a buyer challenges a statement or asks for a warranty about it, address that issue directly. Adding broader no-reliance wording does not resolve the underlying facts.