An executive sued his former employer Dynegy for fraud, claiming he was misled into buying company stock through a loan program. Dynegy won the case because the severance agreement McLernon signed included a disclaimer stating he was not relying on any prior promises or statements. The court enforced the promissory note for $1.88 million. This matters to subcontractors because similar disclaimer clauses in contracts can block fraud claims, even if you believe you were deceived before signing.
Disclaimer of reliance clauses in contracts are powerful legal shields—courts will enforce them to bar fraud claims based on what was said before you signed, even if those statements were false.
Always read the fine print in settlement, severance, and payment agreements. A single clause can eliminate your right to sue for fraud or misrepresentation.