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Know how to identify fraudulent misrepresentation

Contracts form the foundation of most business operations. While this means that you need to know how to adequately negotiate and draft contracts with favorable terms, you also need to know how to spot contractual issues so that you can take legal action when it’s necessary to protect your interests. A breach of contract based on one side’s failure to abide by the terms of the agreement can certainly serve as the basis of legal action, but so, too, can fraudulent misrepresentation. This week, let’s take a closer look at the latter.

What is fraudulent misrepresentation?

Contract law anticipates that the parties to a valid agreement are open and honest with each other about the terms of the contract and the subject matter of the agreement. Yet, far too often one side to a contract tries to obtain a favorable agreement by lying or misrepresenting material facts. In order to successfully prove fraudulent misrepresentation, though, you have to prove certain legal elements. Amongst those elements are the following:

  • A representation of fact was actually made
  • That representation was either untrue or misleading
  • The party that made the misrepresentation either knew it to be false or misleading or made the representation in a way that was with reckless disregard for its truthfulness
  • The other party relied on the representation to its detriment
  • Damages resulted from the reliance on the misrepresentation

Those elements might sound easy enough to prove, but there are a lot of intricacies involved with these cases, which is why you’ll need to know how to build your fraudulent misrepresentation case.

Building your case for success

Fraudulent misrepresentation can affect your bottom line, your reputation, and your future business dealings. There’s simply too much to risk for you to forego a bad contract that was created by fraud. So, if your business has been affected by fraudulent misrepresentation, then you might want to speak with an experienced business litigation attorney who can help you build the case you need to adequately fight to protect your interest.