Reliance on documents, opinions, etc: Overview, definition, and example
What is reliance on documents, opinions, etc.?
Reliance on documents, opinions, and similar materials means that a person or company can make decisions based on written information, expert opinions, or certifications without being held responsible for verifying their accuracy. This is often used in contracts to protect decision-makers, such as company directors or trustees, when they rely on financial statements, legal opinions, or other documents provided by professionals.
Why is reliance on documents, opinions, etc. important?
It’s important because it provides legal protection for those who must rely on third-party information to make decisions. Without such protection, decision-makers could be held responsible for errors in documents they had no role in preparing. This type of clause helps businesses operate efficiently by allowing them to trust expert advice without unnecessary legal risk.
Understanding reliance on documents, opinions, etc. through an example
Imagine a company’s board of directors is reviewing financial statements prepared by an accountant. If the statements contain errors, but the directors reasonably relied on them in good faith, a reliance clause could protect them from liability.
Similarly, if a trustee managing an estate follows a lawyer’s legal opinion when making a decision, they should not be personally responsible if the advice later turns out to be incorrect. The reliance clause ensures they are shielded from liability as long as they acted in good faith.
An example of a reliance on documents, opinions, etc. clause
Here’s how a clause like this might appear in a contract:
“A Party may rely in good faith on any documents, opinions, reports, or statements provided by legal, financial, or other professional advisors, and shall not be held liable for any inaccuracies in such materials unless they had actual knowledge of the inaccuracy.”
Conclusion
A reliance clause allows businesses, directors, and trustees to operate confidently by protecting them when they depend on expert advice or official documents. It ensures that responsibility stays with those who create the materials, reducing unnecessary legal risk for decision-makers.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.