What does fraudulent misrepresentation consist of?

| Jul 15, 2020 | Civil Litigation |

When entering into a deal with another party, both of you typically assume the best about each other.

However, when the other person commits an act of fraudulent misrepresentation, that trust can be easily broken.

Definition

According to FindLaw, when you make a promise to another person or entity, you must dictate all terms of the contract in clear and true statements. Acting in good faith is the most important part of a contract. This includes being clear and honest about what you say. A promise becomes fraudulent when one party purposefully states a false premise or lies about factual information.

Varieties of fraud

A false statement is not just the inclusion of incorrect facts. Whenever you, through a gesture or even through silence, suggest you endorse a statement that is false, then you have lied. Withholding information from someone in order to get him or her to sign an agreement also counts as fraudulent misrepresentation.

Legality

Even if you agree to the contract, your agreement is not binding if the other party withheld or lied about important information. In order to prove this caused you harm, the outcome must have a material impact on the deal.

If you relied on the other party’s untrue representation for accurate advice or instructions, then you may have a case against the other party. Damages must also be present in order to seek legal action. The most common form of remedy for any damages is making the contract rescindable, which allows for both parties to dissolve the deal. If that is not possible, you may seek losses from the opposite party.

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