An investor in a company demanded termination of the investment agreement and repayment of the investment funds due to misrepresentations, including as to the forecasts presented to him. He also sought to file a personal claim against the company’s representatives who made the representations and argued that the limitations on indemnification are not valid and in any case do not apply to the claim against the representatives who were not a party to the agreement.
As to the forecasts presented to the investor the Court held that they are intentions and future plans and even if such did not come true it is not necessarily a misrepresentation if the person who made the representation believed it to be true at such time. The investor may not rely on representations that did not specifically appear in the agreement due to the clause that stated that the agreement sets forth and includes the entire agreements and supersedes any other agreement, representation or commitment preceding it. The meaning of representations and warranties is to split the risk between the parties and the Court will honor that.
As to the limitation of indemnification to claims made within 24 months of the closing of the agreement, the Court held that parties to an agreement may set a time limit on claims and the Court will honor that too. Limitation on right to claim will apply also to personal claims against the representatives of the company even if they are not a party to the agreement because the indemnification limitation shall be deemed an agreement for the benefit of a third party. The Court also held that it will honor an agreement clause setting that the agreement may not be terminated once closing took place.