Purchase Agreement Tip: "Fraud" and fraud are two different things.

Searchers often assume fraud is the same as “Fraud” in the purchase agreement. There is a real distinction between the two. It shows up when you think you have a clear claim and expect to recover from the escrow. “Fraud” is usually a defined term. That definition controls how your claim gets treated. It can be: - limited to intentional misrepresentation - expanded to include equitable fraud - expanded further to capture negligent misrepresentation Each version changes: - what you need to prove - who can be liable - whether the claim stays inside the indemnification framework Now layer in the holdback. In many searcher deals: - a seller note or escrow is the primary recovery source/set off - indemnification is the exclusive remedy - fraud sits outside that structure If those pieces are not aligned, you can get this result: You assert “Fraud,” Seller argues the claim is outside indemnification, Escrow is not available. Now you are chasing recovery directly instead of accessing a secured pool of funds. That is not how most searchers underwrite risk when they model a deal. Before asserting fraud, confirm: - how “Fraud” is defined - whether the claim falls within indemnification - whether escrow is a permitted source of recovery This is not a drafting nuance. It is a recovery issue. If you are under LOI or in purchase agreement markup, this is easier to fix now than after closing. Consider how "Fraud" is defined and compare it to what that means for recovery.