Misrepresentation and nondisclosure are the foundation of many tort law cases. Although the two are separate, misrepresentation often implies negligence on the defendant’s part.
Misrepresentation can be negligent or fraudulent. Negligent misrepresentation refers to an unintentionally false fact which induces the other party into making a contract. In other words, the individual did not directly lie, but made a statement that they did not know was false at the time, such as Syngenta asserting that its GMO corn could be sold in all major markets when it was later proven that it could not be sold in China. Fraudulent misrepresentation refers to purposely making a false statement to trick the other party into making an agreement.
When many think of nondisclosure, they automatically think of a part of a contract where one party is prohibited from telling confidential information. This is not the same nondisclosure. Instead, the legal term refers to failing to tell the other party a fact about a contract or circumstances surrounding an issue.
Misrepresentation and nondisclosure typically refer to information or a fact withheld or misrepresented by a party implies negligence on their part. For example, an act or service provided by one party does not fulfill the terms of the agreement. The party’s actions may be considered unfulfilled because they:
- Misrepresented facts, or
- Failed to disclose details that would prevent performance of the contract.
For example, a homeowner wants to sell their home. They have a buyer willing to pay the asking price. However, the homeowner indirectly tells the buyer the roof is like new, but it is over 10 years old and leaks. This is a misrepresentation of a fact about the house. The buyer, if they discovered the truth after the sell, could seek a remedy such as:
- Rescinding the purchase contract
- Have the defendant pay the cost of the repair
- Have the defendant pay the difference between the diminished value and purchase price
If you discover the other party in your contract misrepresented information or fact, contact a business lawyer. Your lawyer will discuss the details of the situation with you and inform you of the specific remedies available to you.