North Carolina Law Review

University of North Carolina School of Law

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Chapel Hill, NC 27514

Confusion Demands Clarity: A Short, Complicated History of Contract-Based Fraud Claims in North Carolina

September 26, 2017

95 N.C. L. REV. 1767 (2017) 

 

In a contract, an integration clause or waiver of reliance indicates the parties agree that the contract represents their complete agreement. Thus, contradictory information from outside of the contract typically cannot be used to determine the scope of the parties’ agreement. In North Carolina, the courts have provided unclear guidance on whether integration clauses can completely preclude fraud claims based on representations made outside of the contract. Even when contracts are fully integrated and the parties explicitly agree that neither of them is relying on representations made outside of that contract, North Carolina courts have differed when deciding whether or not to allow extra-contractual representations to serve as the basis for fraud claims.

 

This Recent Development is centered on two North Carolina Business Court cases: Wedderburn Corp. v. Jetcraft Corp. and Vestlyn BMP, LLC v. Balsam Mt. Group, LLC. Both opinions involved a motion to dismiss a fraud claim, but they differed in their treatment of extra-contractual statements. The Wedderburn court did not allow extra-contractual representations to serve as the basis for a fraud claim, while the Vestlyn court did allow extra-contractual statements to serve as the basis for a fraud claim. 

 

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