Businessmen and women have been trying to eradicate fraud claims through contractual language since the beginning of Florida jurisprudence. Historically, the attempt to “kill fraud claims with a contract” have been largely unsuccessful. Essentially, an attempt to eliminate fraud via contractual language requires the Court to reward either the non-diligent purchaser or the fraudulent seller. Consider the following two examples:
- A car salesman tells a purchaser that the car has scratch resistant paint and that the paint has a 5 year warranty for scratches. However, the contract has no warranty on paint at all and the contract is completely silent as to any warranty on paint.
- An international fast food burger joint spends a year and a half negotiating an exclusive 25 year contract with the world’s largest manufacturer of sodas. Each party spent several million dollars on attorney’s fees negotiating the contract, which is hundreds of pages long. The main negotiator for the Fast Food Burger Joint informed the soda manufacturer that “all drinks, including coffees for breakfast” would be exclusively provided by the manufacturer of soda. This was very important to the soda manufacturer because they just acquired an international coffee brand. However, the definition of drinks in the contract were “all cold and refreshing liquids sold for consumption, including but not limited to soda, water, etc., etc., etc.”. As such, coffee was not included in the exclusive contract.
This dichotomy between rewarding the non-diligent purchaser and rewarding the fraudulent seller is the heart of the public policy debate that Courts have struggled with for a very long time. Historically, a fraud claim based upon misrepresentations made outside of the contract were allowed to be brought, regardless of whether contractual language meant to exclude these types of claims. Judges reasoned that it was better to reward the non-diligent purchaser than to reward a fraudulent seller. Perhaps in both of the examples given above, the purchaser of the car and the burger joint were asleep at the wheel. However, in both of the examples given above both the car salesman and the burger joint were intentionally lying to the purchaser. Perhaps, the car salesman figured the purchaser would never read the warranty and so he/she intentionally lied by saying anything to close the sale. Perhaps, the negotiator for the burger joint noticed the error in the definition of drinks in the first draft of the 25 year exclusive contract and figured if no one caught it he could later sell exclusive rights for coffee (at least hot coffee) to someone else.
Historically, attorneys have used three clauses in an effort to “kill fraud claims” with contractual language. Attorneys have used waiver clauses, merger clauses and non-reliance clauses. Waiver clauses state that any and all claims (or more specifically claims for fraud) have been waived. Merger clauses indicate that the entire agreement is contained in the contract and as such no parole evidence can be used to prove a fraud claim. No-reliance clauses attack one of the elements of fraud by having the party expressly agree they didn’t rely on anything that was not a contractual term.
Generally, under Florida law, waiver clauses that do not specifically waive fraud do not act to waive fraud claims. Oceanic Villas v. Godson, 148 Fla. 454 (Fla. 1941). However, there are some exceptions to this rule. First, “…a new contract respecting a former transaction waives any claim based on fraud.” Harpold v. Stock Fort Myers Hardware, Co., 65 So.2d 477, 478 (Fla. 1953); see also, Matusick v. Disalvo, 82 So.3d 1045, 1046 (Fla. 4th DCA 2011) (“We affirm dismissal of appellants’ complaint for breach of contract, fraud and negligent misrepresentation, because the allegations of the complaint show on their face that appellants waived the fraud and breach of contract by executing an amendment to reduce their rent after they were aware of the fraud.”) Second, a party cannot recover for alleged misrepresentations that are adequately covered or expressly contradicted in a later written contract. Hillcrest Pac. Corp. v. Yamamura, 727 So.2d 1053, 1056 (Fla. 4th DCA 1999). The above being said, whether a claim predicated on a misrepresentation is precluded by a waiver clause is a matter that is governed by the specific language in the contract and the specific facts surrounding the execution of the contract.
A merger clause, also called an integration clause, generally states that the parties agree that the written agreement constitutes the entire agreement of the parties and supersedes all prior agreements, understanding and representations. This type of clause bars parole evidence (evidence extrinsic to the contract) in proving a fraud claim. When the fraud claim is predicated on extra-contractual representations, it is impossible to prove the existence of representations made outside of the contract if such extra-contractual representations cannot be admitted into evidence. Unequivocally, Florida Courts have held that merger or integration clauses do not prevent a claim for fraudulent misrepresentation. Mejia v. Jurich, 781 So.2d 1175 (Fla. 3d DCA 2001).
Unlike merger or waiver clauses, a non-reliance clause seeks to act as an estoppel as to an essential element of fraud (i.e. reliance). A non-reliance clause contains an affirmative representation that a party to a contract did not rely upon extra-contractual representations. Logically, if a party to a contract is estopped from arguing that it relied upon extra-contractual representations then the party’s fraud claim could never be proven because they could never introduce evidence that they relied upon the misrepresentations. In 2016, Billington v. Ginn-La Pine Island, Ltd, 192 So.3d 77 (Fla. 5th DCA 2016) discussed the differences between these three types of clauses that were intended to prevent claims of fraud. In discussing these different types of clauses, the Court was clearly frustrated with the uncertainty surrounding the enforcement of waiver and non-reliance provisions. In expressing its frustration, the Court stated:
Written contracts are intended to head-off disputes. Public policy strongly favors the enforcement of contracts. Although our decision today might benefit those who would use a disclaimer clause to cleverly avoid the consequences of a deliberate fraud, contracting parties can protect themselves against such fraudulent practices by respecting the gravity inherent in the contracting process and carefully reviewing a contract to ensure that material representations are expressed in the instrument.
Billington v. Ginn-La Pine Island, Ltd, 192 So.3d 77, 84 (Fla. 5th DCA 2016)
In Billington, the Fifth District Court of Appeal acknowledged that their decision that a non-reliance clause prohibits a fraud claim expressly conflicted with a Fourth District Court of Appeal decision that concluded that a non-reliance clause can negate a claim for fraud. Lower Fees, Inc. v. Bankrate, Inc., 74 So.3d 517 (Fla. 4th DCA 2011). Furthermore, the Fifth District Court of Appeal requested that the Florida Supreme Court clearly resolve any confusion about whether a party can contractually waive any claim for fraud and whether a non-reliance clause bars a claim for fraud.
Unfortunately, the Florida Supreme Court did not accept jurisdiction of Billington and as such never resolved these issues.  So as of today, we are still left with uncertainty as to whether certain contractual provisions seeking to avoid fraud claims will be enforced. For the time being, it appears well settled that merger or integration clauses will not prevent a fraud claim. However, it is uncertain with the current state of the law as to whether a waiver clause will prevent a fraud claim. Conversely, the current state of the law in Florida will result in a non-reliance claim preventing a fraud claim in some jurisdictions but not in others. At this time, to protect yourself from a fraud claim the best practice is to include all three types of clauses discussed herein.
 It appears that the case may have settled before the Florida Supreme Court decided to accept jurisdiction.