Hiding the Ball Has Consequences: Delaware Supreme Court Reverses on Justifiable Reliance in M&A Fraud Claim

In Paragon Metals Holdings LLC v. Smith, No. 385, 2025 (Del. July 1, 2026), the Delaware Supreme Court held that a buyer could justifiably rely on representations in an acquisition agreement even though its due diligence failed to uncover information showing those representations were false. The decision confirms that a seller cannot avoid liability for knowingly false representations by arguing that better diligence by the buyer would have revealed the truth.

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