Fraudulent Misrepresentation

Posted on: October 9, 2014
Arlington Business Lawyers

A misrepresentation is a false statement of fact that induces another to act to their detriment. There are three types of misrepresentations that give rise to civil claims: innocent misrepresentation, negligent misrepresentation and fraudulent misrepresentation. Arlington business lawyers will explain that the latter is the most serious.

The Elements

Arlington business lawyers will explain that to prove fraudulent misrepresentation the following elements must be established:

• A person made a false statement of material fact
• with the knowledge the statement was false and
• with the intention that another would reasonably rely on the statement,
• which resulted in harm to the person who acted on reliance on the statement.

The proof of each element, however, depends on specific legal standards.

Material

A cause of action does not arise merely with any false statement; the false statement must pertain to a material fact or one that would make the difference for a reasonable person to act or not act. For example, say the seller of a house tells a prospective buyer the house comes with the washer and dryer included. After the transaction is completed, the buyer moves in and discovers the washer and dryer were sold to another party. This is not a fraudulent misrepresentation because no reasonable person would believe a washer/dryer was material to the sale of a house.

Fact

The statement must be a fact, not an opinion. Saying, “This is a great house, you’ll love it,” for instance, is an opinion.

Reasonable Reliance

The person who relied on the statement has a duty to make reasonable inquiries or investigations into the truthfulness of the statement under the circumstances. If it is something that is readily discoverable, it is unlikely the court will find fraudulent misrepresentation.

Damages

The person who relied on the false statement, the plaintiff, must demonstrate an actual, ascertainable loss for the cause of action to proceed. In addition to recovering the actual losses sustained by the plaintiff, punitive damages may be awarded in particularly egregious cases.

Contact Arlington Business Attorneys for Legal Advice

If you have been the victim of deceit or misrepresentation in a business transaction, you have recourse. Call Paul S. Schleifman at 703-528-1021.