No one enjoys being lied to or tricked. And when it happens in the business context, it can result in significant economic damage or loss. A fraudulent misrepresentation that knowingly or recklessly tricks you into an agreement or deal can result in you receiving poor-quality products, buying a defunct business, or damaging your reputation.
An experienced business and tort attorney can help you understand the elements of fraudulent misrepresentation and determine what remedies might be available.
What Is Fraudulent Misrepresentation?
Under Texas law, fraudulent misrepresentation is a tort claim. It occurs when one party makes an intentional or reckless misrepresentation of fact or opinion with the intent to deceive or coerce the other party into action or inaction based on that misrepresentation. It is one of the most severe types of misrepresentation because it is based on intentionally deceiving or tricking someone into doing something.
Fraudulent Misrepresentation Examples
One can make a fraudulent misrepresentation via written words, spoken words, gestures, exaggerated claims, or silence and inaction. Some common fraudulent misrepresentation examples include:
- Exaggerating the value or quality of goods or services;
- Making false claims about credentials or qualifications;
- Selling faulty goods or services but representing they are in good condition or high quality;
- Withholding information about a company’s flaws or problems to make the business seem stronger;
- Falsifying documents such as annual reports or financials before entering into a business deal;
- Charging higher rates than initially agreed upon; and
- Misrepresenting the status of a project to obtain more funding or billing for work that wasn’t done.
Misrepresentations can also be implied if a reasonable person would have drawn a similar conclusion from the words or conduct utilized. There are many other examples of fraudulent misrepresentation. If you are unsure if you have been a victim of a deceitful transaction, speak with an experienced attorney.
What Are the Elements of Fraudulent Misrepresentation?
There are several elements to prove a claim of fraudulent misrepresentation.
Material Misrepresentation
The first element of a claim of fraudulent misrepresentation is a material misrepresentation. A representation is a statement (written or oral) made by one party to another. A representation is material if the information is important to the person making a decision based on it. The standard is whether a representation would have persuaded a reasonable person to act on it. The false representation doesn’t have to be the sole motivation for entering the agreement or transaction, but they must rely on it when deciding to enter the deal.
False Misrepresentation
The material misrepresentation also must be shown to have been false when it was made. The representation is false if it is a lie or very misleading. Surrounding circumstances, deceptive contexts, and false promises can make the representation seem true even though it isn’t. Non-disclosure or silence when you have a duty to disclose the information can also amount to a false representation.
Knowingly False Representation
To support your claim of false misrepresentation, you must also show that the person who made the statement knew it was false. Alternatively, the person making the representation may have recklessly made a false representation without knowing whether it was true.
Intent for Reliance
The person making the false misrepresentation must also have intended or expected the other party to rely on it in deciding to enter the transaction. A claim of fraudulent misrepresentation may not stand if you can’t show that the defendant intended for you to rely on the statement. Intent is often challenging to prove. Evidence of the person’s statements or actions around the representation can help bolster your claim.
Reliance Leading to Harm
You must also demonstrate that you relied on the false misrepresentation and that the reliance was justifiable. If there is a red flag or indicator that the statement may be false, a consumer must conduct their own due diligence to determine whether it is true.
Further, you must show some injury from relying on the representation. Economic damage is typically the most common form of injury. Without any injury, loss, or harm from relying on the representation, there is no fraud.
Remedies for Fraudulent Misrepresentation Claims
You may be entitled to remedies if you have suffered injury or loss from a fraudulent misrepresentation. The most common remedy is financial compensation or monetary damages if you show you experienced measurable loss or harm from the misrepresentation.
Alternatively, contract termination may be available, releasing the parties from their contractual obligations. A court may dissolve a contract if the consumer is not harmed monetarily but still seeks relief.
The Curley Law Firm Can Help Assess Your Claim
If you believe you’ve suffered a loss due to someone else’s fraudulent misrepresentation, The Curley Law Firm can help. Adam Curley can assess the facts and circumstances of your case and determine whether you have an actionable claim for fraudulent misrepresentation. Adam will advocate zealously on your behalf and ensure you get the remedy you deserve. Services provided by The Curley Law Firm include:
Adam has been helping clients resolve business and fraud claims for over 16 years. As a solo practitioner, Adam prides himself on the one-on-one, personalized attention he can offer each client. He is a results-oriented attorney who can help you navigate the complexities of a fraudulent misrepresentation case or negotiate a settlement outside of court. Contact The Curley Law Firm today to learn how they can help your case.