Fraudulent Misrepresentation

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What Is Fraudulent Misrepresentation?

A contract is only valid if all parties agree to the terms. A person misrepresents if they make a false statement of fact that induces someone into a contract. For example, let’s say a party advertises a used car as having “new breaks, new tires, and a new engine.” In actuality, everything is 5 years old. A buyer relies on the representation that the car has new parts and buys the car, but she wouldn’t have paid the price she had if she knew the parts were actually five years old. In this scenario, the seller misrepresented the condition of the car.

Fraudulent misrepresentation occurs when a party makes a purposeful misrepresentation so that the buyer enters into a contract to purchase. In the above example, if the seller knew that all the parts were old and decided to advertise them as new nevertheless, she fraudulently misrepresented the condition of the car to ensure its sale.

Elements of Fraudulent Misrepresentation

For a plaintiff to prevail in a lawsuit for fraudulent misrepresentation, she must prove six elements:

  1. A representation was made;
  2. The representation was false;
  3. The representation was known to be false or made recklessly without knowledge of its truth at the time it was made;
  4. The representation was made with the intention that the plaintiff rely on it;
  5. The plaintiff in fact did rely on the misrepresentation; and,
  6. The plaintiff suffered damages as a result.

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Types of Fraudulent Misrepresentations

In general, there are two types of misrepresentations through words. The first is when someone makes an affirmative statement that is false. The second is known as a “half-truth” or “partial truth,” which means a party tells the truth but conceals or omits some material facts.

A second kind of misrepresentation occurs when there is silence or non-disclosure of facts. It’s important to note that silence generally does not constitute fraud; however, if a party is under a legal obligation to disclose all material facts, and chooses to be silent, this can constitute fraudulent misrepresentation.

Remedies for Fraudulent Misrepresentation

Misrepresentation are civil offenses, meaning they are only causes of action that can be brought in civil court. The general remedy in civil court for all types of misrepresentations is rescission. This means the court will act like the transaction or contract never existed, and all parties are brought back to the position they were in before the contract was formed.

For example, let’s say you sell your old computer for $300 which you advertise as being in “good working order.” The buyer discovers that it doesn’t work. In this case, you return the $300, and the buyer returns the computer. Everyone goes back to their original position before entering the contract.

Fraudulent misrepresentation is considered a more egregious offense than misrepresentation. Whereas a person can innocently misrepresent a fact, fraudulent misrepresentation requires intent to misrepresent. For this reason, damages can also be awarded to the aggrieved party.

Can an Attorney Help Me?

Fraudulent misrepresentation is a serious claim, but it is difficult to prove. Showing that someone intended to deceive requires a lot of digging for evidence. Why? A wrongdoer can just claim they didn’t know that their words had the effect of deceiving, and then it’s just your word against hers. That’s why a knowledgeable business lawyer can help you prove your claim and achieve the kind of results you’re entitled to.

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Last Modified: 06-06-2017 10:39 PM PDT

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