Fraudulent misrepresentation may be defined as any type of lie or false statement that is used to trick a person into an agreement. The misrepresentation can occur through many ways, including written words, spoken words, gestures or body motions (such as a nod), or through silence or inaction.
Fraudulent misrepresentation is frequently raised in connection with contract law. Whenever parties enter into a legal agreement or contract with one another, all parties must agree to the contract terms. However, if there is any instance of fraudulent misrepresentation, it can affect the contract in many ways, such as making it invalid.
An example of this is where one party purposefully makes a statement that is false to the other party, for the purpose of getting them to sign a contract. For instance, if an auto dealers lies about the accident history of a used vehicle, and you sign a contract because you thought the car was never in an accident (but it was), then it might be considered fraudulent misrepresentation.
It’s important to keep in mind that almost every legal issue, including issues with fraudulent misrepresentation, depends on the facts and circumstances surrounding the case. No two cases are alike, so no matter how identical a previous case is to your situation, keep in mind that the outcome could be very different.
There are several different types of fraudulent misrepresentation. These can depend on several factors, including the circumstances surrounding the agreement, as well as state laws. For instance, the history of dealings between the parties can often influence a court’s decision as to whether fraudulent misrepresentation has occurred.
As mentioned, fraudulent misrepresentation can be accomplished through many forms of communication, such as writing, speech, body movements, or even silence. Some common types of fraudulent misrepresentation may include:
- Making a statement to the other party that is clearly false;
- Making a statement that is partially true (a “half lie”); this means that some parts of the statement may be true while other aspects of it may be false;
- Omitting details in a way that creates false beliefs in the other person’s understanding; or
- Being completely silent on a subject or failing to disclose important information (especially where they are legally required to provide the information).
Bear in mind that a party sometimes doesn’t need to know that a statement is false in order to be found liable for a contract violation. For instance, if they represent information that they should have known to be false due to their training or background, then it might be factored into a court’s decision in a lawsuit.
In order to find a person liable for fraudulent misrepresentation, courts must prove various elements. These may vary by state or jurisdiction; however, elements of proof for fraudulent misrepresentation generally include:
- A representation was in fact made;
- That particular representation was false;
- The defendant had knowledge that the representation was false;
- The statement was made with the intention that the other party rely on it and enter into a contract or agreement;
- The plaintiff did in fact rely on the misrepresentation and would not have otherwise entered into the contract or agreement without it; and
- The plaintiff suffered measurable harm as a result of the fraudulent information or statement.
Using the example above, if a car dealer makes a representation that they knew was false, in order to get the other party to buy a car, and the other party relied on that misrepresentation, then it could form the basis for a fraudulent misrepresentation claim. The court would also need to show that the plaintiff relied on the misrepresentation and caused them some sort of harm (for instance, paying too much for the car).
Some jurisdictions may have differences in the details of these elements. For instance, as mentioned, it is not necessary in some jurisdictions that the defendant knew that the statement was false. Some courts may find liability if the defendant should have known of its falsehood, or made the statement recklessly without knowledge of its truth;
Fraudulent misrepresentation is just one of many types of misrepresentation violations. Others include negligent misrepresentation and innocent misrepresentation. These distinctions can be complex, and may require the assistance of a lawyer when dealing with them.
In order to be found liable for fraudulent misrepresentation, the plaintiff must suffer measurable harm as a result of the fraudulent statement. This is important, because courts will formulate their remedies based on the plaintiff’s harm or loss.
Thus, in most fraudulent misrepresentation cases, the remedy will be some form of monetary damages. These will be calculated based on the amount of harm or loss experienced by the plaintiff.
It is important to note that various parties (and combinations of parties) can be held liable and required to pay damages to the plaintiff. For instance, if a person was instructed by an employer to make a fraudulent statement, then their employer might be held liable under vicarious liability legal principles.
If several persons made fraudulent statements to the plaintiff, or if they assisted in creating the false misrepresentation, then it is possible that they can also be named in the legal claim and sued for remedies and damages.
In many instances, there may be defenses available to a person who is being charged with fraudulent misrepresentation. These will depend on many factors, including state laws and the exact nature of the misrepresentation. Some common types of defenses for this legal issue may include:
- Lack of Evidence: As mentioned, the elements of proof for fraudulent misrepresentation must all be met in order to prove a person liable. If there is not enough evidence to prove a particular element, the defendant might not be found liable. This is one of the more common defenses to fraudulent misrepresentation.
- For instance, if there is no evidence to show that the defendant actually made a fraudulent misrepresentation, it may serve as a defense. Another example is if the plaintiff didn’t actually suffer any damages.
- Laches: If the plaintiff waited too long to file their misrepresentation claim, it may serve as a defense under a laches theory of law. Most fraudulent misrepresentation claims are associated with a statute of limitations (i.e. a filing deadline). Thus it’s important to bring a lawsuit as soon as you suspect you have a claim.
- Coercion/Duress: It may serve as a defense if the defendant was forced to make the fraudulent statement under threat of harm or under conditions of duress (for instance, being threatened that they will be fired if they don’t make the fraudulent statement). This is a somewhat more rare defense as conditions such as these are not all that common.
Various other defenses may apply. These will all depend on state laws and the attorney’s ability to research local laws and craft an appropriate legal strategy.
Fraudulent misrepresentation is a serious issue that can have many legal consequences. If you have been the victim of fraudulent misrepresentation, or are involved in any way with such a dispute, you may need to hire a local business attorney. An attorney in your area can provide you with legal research and representation needed to succeed on your claim.