Commercial Fraud Lawyers

What is fraudulent misrepresentation?

Fraudulent misrepresentation occurs where a false statement of fact induces a person to act on the statement and the person making the statement knew it to be false. It the acting party suffers a loss a result of the fraudulent misrepresentation, the representing party is liable for that loss.

Liability for fraudulent misrepresentation requires that the person making the representation have actual knowledge that the statement made is false. A false statement, made through carelessness and without reasonable grounds for believing it to be true, may be evidence of fraud but does not necessarily amount to fraud.

What if the representing party did not intend for the other party to suffer a loss?

Whether there is a motive to harm or deceive in making the false statement is immaterial. If the statement is fraudulent, the representor is liable if intending that the representee act upon the false representation, regardless of whether the person making the statement intended to cheat or injure the person to whom the misrepresentation was made.

Do all fraudulent statements give rise to an action for fraudulent misrepresentation?

The fraudulent statement must be materials to support an action for fraudulent misrepresentation. For fraudulent misrepresentation inducing a contract, the representation must be relevant or material to the substance of the contract. A material representation is one necessarily influencing and inducing the transaction.

It is not necessary that the misrepresentation be the sole determining cause of the transaction. It is enough that the statement may have constituted a material inducement.

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