Fraudulent Misrepresentation in Contracts

As a business owner, you create contracts that specify certain expectations and requirements agreed to by both parties. When one party purposefully makes a false statement to get another party to sign a contractual, legally-binding agreement, this is known as fraudulent misrepresentation. Understanding what constitutes fraudulent misrepresentation can help you determine if you should seek recourse regarding the false statements in your contract.

What is Fraudulent Misrepresentation?
Fraudulent misrepresentation is actually a type of civil action that arises from contract law. When one person lies to another or makes a misrepresentation of any material fact that persuades or induces the other party to sign a contract, it can be considered grounds for a fraudulent misrepresentation lawsuit in California.

The following elements are required to prove fraudulent misrepresentation in a court of law:

A false representation or lie was made by one party.
That misrepresentation was related to a material fact or component or the transaction.
The party making the misrepresentation did so with malice, meaning they did so with the knowledge that the statement was false, or with a reckless disregard regarding the truth of the statement.
The misrepresentation or lie was made as a direct attempt to induce the other party to sign the contract.
The other party relied on the misrepresentation and used it to make a decision to sign the contract.
The misrepresentation was the cause of any injury suffered by the other party.

Examples of Fraudulent Misrepresentation
It is important to note that a fraudulent misrepresentation typically regards an actual fact, not someone’s opinion, intention, or some future occurrence. Some examples of fraudulent misrepresentation in contracts can include the following:

A completely false statement
A partially true statement, in which the other part is a misrepresentation that affects a material fact of the transaction
The omission of some details that would create a misunderstanding or false belief by the other party
Remaining completely silent, or the failure to disclose material issues that would affect the contract, or that are legally required to be stated according to the law.

Remedies and Damages for Fraudulent Misrepresentation
If you discovered that your contract included fraudulent misrepresentation by the other party, you may have suffered financial or other types of damages. Oftentimes, the court will allow the harmed party to rescind the contract and make it voidable. However, making a contract void does not always bring complete restitution to the victim of fraudulent misrepresentation. Therefore, monetary damages are also awarded by the court. However, in order to bring a claim, you must have suffered actual damages, and the severity of those losses will be used by the courts to determine remedies regarding your case.

Contact an Experienced Business Attorney
Fraudulent misrepresentation in a contract can cause catastrophic financial losses. Courts take these cases very seriously, and there are significant legal consequences. If you have been a victim of fraudulent misrepresentation, contact business law attorney in La Jolla, Law Office of Kris Mukherji at (858) 442-5747. We can help you with your business law and business contract needs, and also help you if you find yourself a victim of fraudulent misrepresentation.