It rarely starts with a lawsuit. It starts with a maintenance report. A building you bought three years ago is taking on water, or the revenue you underwrote never shows up, or a piece of equipment you were told was serviced has not been serviced since the year before closing. You go back through the deal file, you find the questionnaire the seller filled out, and you decide you were lied to.
Then your lawyer finds the paragraph. It is usually in the middle of the purchase agreement, it is usually set in all capital letters, and it usually says that you were not relying on anything the seller told you outside the four corners of the contract. You signed it. Everyone signs it. And in Texas, that paragraph can end a fraud claim before a jury ever hears the facts.
A Texas Business Court opinion issued on October 26, 2026 is a clean illustration of how that happens, and of the one place where the buyer’s claim still had room to breathe.
What the Business Court Decided
The case is Passco Companies, LLC v. Rim WP Apts, LLC, cited as 2026 Tex. Bus. 75, Cause No. 26-BC04A-0002, in the Fourth Division of the Texas Business Court. Judge Marialyn Barnard signed the Opinion and Order on Motion for Partial Summary Judgment in October 2026, after a hearing held on September 15, 2026.
The underlying transaction was the 2019 purchase of an apartment project in San Antonio under a purchase and sale agreement. In March 2021 the buyer found water penetration traced to defects in the building envelope. The buyer sued in 2022, pleading fraud, fraudulent inducement, fraud by nondisclosure, civil conspiracy, alter ego, breach of the purchase and sale agreement, breach of management agreements, and declaratory relief. The case was removed to the Business Court in March 2026.
Five of the six defendants moved for partial summary judgment. The court granted it in part. The fraud, fraudulent inducement, fraud by nondisclosure, civil conspiracy, and declaratory judgment claims against four of those defendants were dismissed with prejudice, as was a claim for breach of a sub-management contract that had been terminated at closing and never assigned to the buyer.
The ruling is not a final judgment, and the court said so. Claims for fraud and for breach of the purchase and sale agreement against the selling entity itself remain pending, along with a claim for breach of a separate May 31, 2019 sub-management contract.
The Paragraph That Did the Work
The clause the court enforced sat in Paragraph 2.6 of the purchase and sale agreement, under the heading “Buyer’s Reliance on its Investigations.” The court quoted it in full. The operative language included that the sale was made “WITHOUT REPRESENTATION, COVENANT, OR WARRANTY OF ANY KIND,” that the buyer “IS NOT RELYING ON ANY STATEMENT, REPRESENTATION OR WARRANTY OTHER THAN THOSE CONTAINED IN THIS AGREEMENT,” and that the buyer “IS NOT NOW RELYING, AND WILL NOT LATER RELY, UPON ANY REPRESENTATIONS AND WARRANTIES MADE BY THE SELLER.”
Two more features of the clause mattered. It recited that acceptance of the property on an as is, where is basis was “A MATERIAL PART OF THE CONSIDERATION,” and it said it would survive indefinitely any closing or termination.
The clause was not absolute. It carved out three things: the seller’s representations in Paragraphs 6.6 and 7.1, warranties of title in the deed and assignment, and the assignment itself. Everything else was swept out.
Why Texas Courts Enforce These Clauses
Justifiable reliance is an element of fraud. The buyer has to show it was entitled to rely on what it was told. The court noted that justifiable reliance usually presents a question of fact, which is why these disputes ordinarily reach a jury. A valid disclaimer of reliance is the exception, and it works by negating that element as a matter of law.
Whether a particular clause is enforceable is itself a question of law, and the court looks at the contract together with the totality of the surrounding circumstances. The opinion applied five considerations drawn from Texas Supreme Court authority, citing Maya Walnut LLC v. Ly, 738 S.W.3d 764 (Tex. 2026):
- Is the disclaimer language clear and specific?
- Were the terms negotiated rather than boilerplate?
- Were the parties represented by counsel?
- Was the transaction at arm’s length?
- Were the parties knowledgeable in business matters?
That framework traces back to two decisions every Texas transactional lawyer knows: Schlumberger Technology Corp. v. Swanson, 959 S.W.2d 171 (Tex. 1997), and Forest Oil Corp. v. McAllen, 268 S.W.3d 51 (Tex. 2008). The Business Court compared the language in front of it to the clauses in both cases and found it at least as clear.
The rest of the agreement then supplied the remaining factors. Paragraph 7.2(g) recited that the buyer was an experienced and sophisticated purchaser of commercial real estate projects. Paragraph 10.13 recited that “the parties and their counsel have reviewed and revised this Agreement.” The record showed counsel on both sides and an arm’s length deal. The court held the disclaimer of reliance clause enforceable.
Read those two recitals again, because they are the part most buyers skim. The sophistication recital and the mutual drafting recital are not throat clearing. In this opinion they are two of the five reasons the buyer lost its fraud claims.
What the Disclaimer Actually Reached
The court was specific about scope rather than sweeping. It held the clause negated reliance on representations in a pre-sale questionnaire, because the questionnaire sat outside the agreement. It negated the fraudulent inducement claim to the extent that claim rested on the questionnaire. And it negated fraud by nondisclosure premised on the documents the seller delivered, because a separate provision, Paragraph 2.1, said the seller made no representations or warranties as to the accuracy or completeness of that information.
That last point deserves its own sentence. A diligence data room is not a set of representations. If the agreement says the seller does not vouch for what is in the documents it hands over, then finding something misleading in those documents later is not automatically a fraud claim.
The Carve-Out Is Where the Real Fight Happens
Because Paragraph 7.1 was carved out, the disclaimer did not touch the claims built on those representations. The buyer pointed to Paragraph 7.1(e), in which the seller represented that it had not received written notice that the property was in violation of any applicable building or zoning code or ordinance.
The two sides read that differently. The defense read it as covering only receipt of a document that states a violation. The buyer read it as covering any written notice from which a violation might be inferred. The court held the provision unambiguous and adopted the narrower reading: it contemplates receipt of a written notice stating the property is in violation of a building code, and it does not contemplate receipt of a written notice from which a code violation might be inferred.
On that record there was no evidence the seller had received such a notice. So the representation was not false, and the fraud claims built on it failed. Note the mechanism. Those claims did not die because of the disclaimer. They died on falsity, which is a different element and a different fight.
The drafting lesson is straightforward. A representation that the seller received no written notice of a violation is a much narrower promise than a representation that no violation exists. Inspection reports, engineering memos, and consultant findings sitting in the seller’s files may describe conditions in detail without ever stating that a code was violated. If you want the broader protection, the words have to say so before you sign.
Conspiracy and Alter Ego Fall With the Fraud Claims
The buyer had also pleaded civil conspiracy and alter ego. Both went out with the fraud claims. Civil conspiracy requires an underlying tort, and the court cited Agar Corp., Inc. v. Electro Circuits International, LLC, 580 S.W.3d 136 (Tex. 2019) for that proposition. Once the fraud theories were negated, there was nothing left to conspire about. Alter ego fared no better, because it is a way of imposing liability on another party, not a separate cause of action.
The declaratory judgment claims went out for a related reason. The court held the requested declarations duplicated issues already before it and added no independent remedy. One of them was a mirror image of the contract claim. Another concerned service and jurisdictional objections already presented. A third raised a capacity question the pleadings already put at issue.
For an owner reading this, the pattern is worth noticing. Pleading more theories does not create more leverage when every added theory depends on the same disputed facts. If the core claim is negated, the satellite claims go with it.
What This Ruling Does Not Say
It is worth being careful here, because the headline version of this ruling is wrong.
The court did not announce a general rule that disclaimers defeat fraud claims. The holding is tied to this clause, its carve-outs, and the specific circumstances the opinion listed. A boilerplate clause in an unnegotiated form, signed by an unrepresented party who is not a sophisticated commercial buyer, is a materially different question, and the five considerations the court applied are the reason why.
The court also did not hold that the disclaimer bars fraud claims based on the carved-out Paragraph 7.1 representations. It disposed of those on falsity. And it did not analyze the “To Seller’s knowledge” qualifier that appears in the quoted text of Paragraph 7.1(e), or decide whether the written notice contemplated by that paragraph has to come from a governmental body. Those questions remain open on this record.
Finally, this is a trial court opinion. Business Court decisions are persuasive rather than binding on other divisions, and appeals from the Business Court run to the Fifteenth Court of Appeals. Treat the opinion as a well reasoned look at how one division applied settled Texas Supreme Court authority, not as a new rule.
Five Questions to Ask Before You Sign
None of this requires a dispute to be useful. It is a checklist for the next deal on your desk.
- Where is the no-reliance language, and what exactly does it disclaim? Find the paragraph and read it out loud. In this agreement it was Paragraph 2.6, not a recital.
- What is carved out? In this deal the carve-outs were two numbered representation paragraphs, title warranties, and the assignment. Everything else was gone.
- Does each carved-out representation say what you believe it says? A no-written-notice representation is not a no-violation representation.
- Are the diligence materials disclaimed separately? If the agreement says the seller does not vouch for the accuracy or completeness of what it produces, the data room is not a representation.
- Does the clause survive closing, and for how long? Here it survived indefinitely, which is why it was available three years later.
If You Have Already Signed
Most owners read something like this after the deal, not before. That is still worth doing, and it is worth doing before a dispute rather than after.
Pull the executed agreement and find the reliance paragraph. Mark the carve-outs. Read every carved-out representation against what you were actually told during diligence, because those representations are the part of the agreement you can still enforce. Check the survival provisions, the notice requirements, and any contractual limitations period, since those can close doors faster than the statutory deadlines. Preserve the diligence file, the questionnaires, and the correspondence from the months before closing, because the fight will turn on what was said where, and whether it was inside or outside the contract.
The short version: in Texas, the scope of a seller’s representation and the scope of the buyer’s disclaimer are decided by the words on the page, and those words are decided months before anyone is unhappy. If you are negotiating a purchase agreement, reviewing one you signed, or facing a dispute over what you were told before closing, you can read more about how we handle these matters on our business litigation page.
Related reading
- Can You Sue for Fraud After Signing a Texas Release Agreement?
- 5 Contract Clauses Every Texas Business Owner Should Understand Before Signing
- Does Your Texas Business Dispute Belong in the Business Court?
About the author: David R. Wortham Jr. is a partner at Hanshaw Kennedy Hafen in Frisco, Texas. He is a business litigation attorney who has advised and represented businesses and individuals in complex matters for more than a decade.