University:
University of North Carolina at Charlotte
Course:
BLAW3150 | Business Law
Academic year:

2023
Views:

465

Pages:

7
Author:

Nesbyenvkk

13-2 Fraudulent Misrepresentation • Typically, fraud involves: 1. A misrepresentation of a material fact must occur. 2. There must be an intent to deceive. 3. The innocent party must justifiably rely on the misrepresentation. 4. To collect damages, a party must have been harmed as a result of the misrepresentation. 13-2a Misrepresentation Has Occurred (slide 1 of 3) • The first element of proving fraud is to show that misrepresentation of a material fact has occurred. • Misrepresentation by Conduct • Occurs when a party takes specific action to conceal a fact that is material to the contract. • Spotlight Case Example 13.5 Selleck v. Cuenca (2009) 13-2a Misrepresentation Has Occurred (slide 2 of 3) • Statements of Opinion • Statements of opinion and representations of future facts (predictions) are generally not subject to claims of fraud. • Sellers are allowed to use puffery to sell their goods without being liable for fraud. 13-2a Misrepresentation Has Occurred (slide 3 of 3) • Misrepresentation of Law • Misrepresentation of law ordinarily does not entitle a party to be relieved of a contract. • Exception: When the misrepresenting party is in a profession known to require greater knowledge of the law than the average citizen possesses. • Misrepresentation by Silence • Ordinarily, neither party to a contract has a duty to come forward and disclose facts, and a contract normally will not be set aside because such information has not been volunteered. 13-2b Intent to Deceive • The second element of fraud is scienter, or knowledge on the part of the misrepresenting party that facts have been misrepresented. • Innocent Misrepresentation • Occurs when a person makes a false statement of fact that he or she believes is true. • Negligent Misrepresentation • Occurs when a person makes a false statement of fact through carelessness, or because he or she did not use the skill and competence required by her or his business or profession. 13-2c Justifiable Reliance on the Misrepresentation • The third element of fraud is reasonably justifiable reliance on the misrepresentation of fact. • The deceived party must have a justifiable reason for relying on the misrepresentation. • The misrepresentation must also be an important factor—but not necessarily the sole factor—in inducing the deceived party to enter into the contract. • Case Example 13.11 Cronkelton v. Guaranteed Construction Services (2013) 13-2d Injury to the Innocent Party • Most courts do not require a showing of harm in an action to rescind a contract. • In contrast, to recover damages caused by fraud, proof of harm is universally required. • The measure of damages is ordinarily equal to the property’s value had it been delivered as represented, less the actual price paid for the property.

13-2 Fraudulent Misrepresentation

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