CBS, Inc. v. Ziff-Davis Publishing Co.
New York Court of Appeals
553 N.E.2d 997 (N.Y. 1990)
CBS (plaintiff) agreed to buy businesses from Ziff-Davis (defendant), which provided financial information covered by express warranties of truthfulness; CBS independently investigated and found the information untruthful, informed Ziff-Davis (which disputed the findings), but proceeded to close the deal anyway given the time and money already invested, with both parties agreeing that closing didn't waive either side's rights or defenses. CBS then sued for breach of the profitability warranties; Ziff-Davis moved to dismiss, arguing CBS couldn't show reliance on warranties it already knew to be false, and the trial court and appeals court agreed, dismissing the suit before CBS appealed further.
Whether a buyer must establish reasonable reliance on a seller's express contractual warranty in order to sue for its breach, particularly where the buyer discovered the warranted facts were false before closing the deal.