Depending on the nature of the case, remedies for fraudulent misrepresentation may include termination of the contract and damages. Termination of the contract is the most common remedy, as fraudulent misrepresentation makes it questionable (as opposed to simply "void"). Therefore, the parties may choose not to terminate the contract - which brings the parties back to their pre-contractual positions - if this is not possible. With regard to damages, only actual losses resulting from the misrepresentation can be claimed.  A lawyer is required to be honest in his dealings with others on behalf of a client, but generally has no positive obligation to inform a counterparty of the relevant facts. A false statement can occur when the lawyer records or confirms a statement made by another person that the lawyer knows to be false. Misrepresentations may also result from partially true but misleading statements or omissions that amount to corroborating inaccuracies. For dishonest conduct that does not constitute perjury or for a misrepresentation by counsel that is not made in the context of representing a client, see rule 8.4.  Rule 1.2(d) prohibits a lawyer from advising or assisting a client in conduct that the client knows to be criminal or fraudulent.
Paragraph (b) contains a specific application of the principle set out in Rule 1.2(d) and deals with the situation where a customer`s offence or fraud takes the form of a lie or misrepresentation. Usually, a lawyer can avoid supporting a client`s crime or fraud by withdrawing from representation. Sometimes it may be necessary for the lawyer to announce the fact of resignation and reject an opinion, document, confirmation or similar. In extreme cases, substantive law may require a lawyer to disclose information about the representation to avoid being deemed to have aided and abetted the client`s crime or fraud. If the lawyer can avoid aiding and abetting a client`s crime or fraud solely by disclosing such information, the lawyer is required to do so in accordance with paragraph (b), unless disclosure is prohibited by rule 1.6. A claimant who has been the victim of fraudulent misrepresentation can claim both withdrawal, which cancels the contract, and damages. With regard to damages, only actual losses resulting from the misrepresentation can be claimed. In the case of an innocent misrepresentation, a party had reasonable grounds to believe that a false statement was true at the time of the statement.
The only remedy against innocent misrepresentation is the award of damages - the contract cannot be cancelled. Like other types of misrepresentation, the claim for damages requires a plaintiff to prove that he or she suffered harm as a result of the misrepresentation. The third type is fraudulent misrepresentation. A fraudulent misrepresentation is a statement that the defendant made knowing that it was false, or that the defendant made recklessly in order to induce the other party to enter into a contract. The aggrieved party may request the cancellation of the contract and claim damages from the defendant. To succeed in a claim for fraudulent misrepresentation, the claimant must be able to prove the following six elements: In some situations, such as a fiduciary relationship, a misrepresentation can occur by omission. That is, false statements can occur if a trustee fails to disclose material facts of which he or she is aware. In court, the plaintiff must prove that the author had no reasonable reason to believe that the story was true. The applicant must also prove the intent that the abuser attempted to induce the applicant to rely on the misrepresentation.
In many courts, the plaintiff must prove that he or she relied on the false statement was reasonable. In addition, the plaintiff must have suffered prejudice as a result of relying on the misrepresentation. In a dispute, a plaintiff must prove the elements of fraudulent misrepresentation. Specifically, there are three types of misrepresentation. An innocent misrepresentation is a false statement of material facts by the defendant who did not know at the time of signing the contract that the statement was false. The remedy in this situation is usually termination or cancellation of the contract. False information is a civil offence. As a result, claims are heard only in the civil courts. Typical legal remedies include termination of the contract and attribution of a tort.
Negligence is also a separate civil offense, with its own remedies under the tort of negligence. A plaintiff could sue the offending party for negligent misrepresentation and negligence. Omission that induces misleading statements may also constitute misrepresentation. For example, in Striker v. Graham Pest Control Co., the appeals division of the New York Supreme Court, ruled that the agent of a seller who failed to disclose a carpenter ant infestation made false statements to buyers because "disclosure of a material fact amounts to corroborating misrepresentation when a party is required to disclose relevant information." Significant omissions in the marketing of a product can also be misrepresentation. For example, in Drew v. Sylvan Learning Center, Corp., a New York State court found that the fact that a tutoring service did not disclose that it measured "grade level" against its own standards in its brochures, contrary to the usual connotation of grade levels in the public school system, constituted a false statement by omission. The second type is negligent misrepresentation. This type of misrepresentation is a statement that the defendant did not attempt to verify before performing a contract.
This is a violation of the concept of "due diligence" that a party must apply before entering into an agreement. The remedy for negligent misrepresentation is termination of the contract and, if necessary, damages. Fraudulent misrepresentation occurs when a person knowingly and intentionally uses false factual allegations to induce another party to enter into a contract. A party at fault must either not believe in the veracity of its statement or ruthlessly ignore whether a statement is true or not. The breaching party must have intended to persuade the aggrieved party to enter into the contract. Created by FindLaw`s team of writers and legal writers| Last update 16. February 2018 Everyone who runs a business understands that most deals and agreements are sealed by a contract, even if it`s just a handshake. In essence, contract law regulates the transfer of rights from one party to another and holds each party liable for the agreed terms. It is of paramount importance in any contract that both parties are on the same page and act in good faith. However, if a party makes a false or misleading statement to deceive another party in a contract that causes damage, the aggrieved party may sue for fraudulent misrepresentation. The difference between fraudulent misrepresentation and negligent misrepresentation lies in the scale of the crime.
Fraudulent misrepresentation has a "reckless disregard" for the truth, while negligent misrepresentation only requires statements of fact without a reasonable basis in the truth. It is important to note that misrepresentation only applies to factual claims. Forward-looking statements and expressions of opinion do not give rise to any legal liability. A misrepresentation is a false or misleading statement or material omission that misleads other statements with intent to deceive. Misrepresentation is one element of common law fraud and other fraud pleas, such as securities fraud. There is also an obligation to correct factual allegations that are later found to be false. In this case, failure to correct a previous misrepresentation would constitute misrepresentation. In higher-stakes situations, a false statement may be considered an event of default by the lender, such as in a loan agreement. Meanwhile, misrepresentation may be a reason to terminate a merger and acquisition (M&A) transaction, in which case significant pause fees may apply. The following information covers the basics of fraudulent misrepresentation (which is separate from the breach), including the necessary elements for liability and remedies.
A false statement by the action of a false statement can take shape. For example, in Commonwealth v. Scott, a Massachusetts Supreme Court case, a forensic laboratory chemist, made a series of corroborating false statements by signing drug certificates and testifying to the identity of the substances in cases where she had not properly tested the substances in question. However, pure expressions of opinion are generally not considered false statements. For example, in Virginia Bankshares v. Sandberg, the Supreme Court held that statements about reasons, opinions or beliefs are not in themselves false statements, but may be made where there is a context of trust between the person who allegedly made the false statement and the recipient and the statement is objectively false. In addition, the Supreme Court held in Omnicare, Inc. v. Laborers District Council Construction that expressions of opinion, such as: Statements preceded by "we believe" may be false statements if the speaker does not actually represent that opinion.
If the opinion statement contains underlying factual claims (for example, we believe our product is the best because it outperformed other competing products in our laboratory tests [factual claim]), that factual claim may constitute a false claim if it is false. Other types include negligent misrepresentation, where a party has failed to adequately ensure the accuracy of the statement, and innocent misrepresentation, which is neither fraudulent nor negligent.