Running a company in California can be exciting and rewarding, but you need to be aware of business torts that can occur. One of them is fraudulent misrepresentation.
What is fraudulent misrepresentation?
Fraudulent misrepresentation is committed when one party deliberately deceives another to cause them to sign a contract. Once the deceived party realizes that fraud has been committed against them, they may file a claim against the person or company that issued the contract.
There are certain elements that must be in place to have a case of fraudulent misrepresentation. The party must have presented information that was proven to be false. When the misrepresentation was made, the individual knew that it was false, but the person who was deceived agreed to it while believing it was true. Sometimes, the fraudulent misrepresentation may be stated in a reckless manner as well. However, regardless of how the misrepresentation was made, the deceived person must have believed the fraud and suffered losses or damages as a result.
For example, if a company falsely touted a miracle weight loss pill to a retailer with the purpose of selling it in stores, the retailer might have cause for a lawsuit. If the retailer signed a contract to sell the weight loss pill, and the company knew that the product did not do as was claimed, the retailer could sue due to being deceived and suffering damages.
How can fraud be proven in this type of situation?
Business torts involving fraudulent representation require that the fraud be proven. To prove fraud in a lawsuit, there must be a misrepresentation or omission of existing facts rather than something promised for the future.
Business torts can lead to serious damages. In some cases, the solution is as simple as rescission of a contract, but if you’ve suffered real damages, it might be beneficial to fight for compensation.