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What is contract misrepresentation?

On Behalf of | Nov 11, 2021 | Fraud

When you enter into a contract and uphold your end of a bargain, you expect to get what you’re due in return. However, some people are masters at stretching the truth beyond all recognition.

A misrepresentation is any kind of false statement of fact that one party makes to induce another party into a deal. The deceived party is, then, the victim of fraud.

What does misrepresentation look like?

The possibilities are endless, but imagine this: You’re a fan of old cars and you’re considering buying a 1987 Ford Mustang. However, the car lot’s owner steers you to an 1975 Cadillac and somewhat proudly tells you that the car was once owned and driven by Elvis Presley. A big fan, you’re so excited at the idea of owning something with that kind of history that you buy it — only to find out later that the car was owned by someone named Elvis Priestly.

You naturally feel deceived — and rightly so. If you hadn’t relied on the salesman’s word, you wouldn’t have bought that particular car.

What kinds of misrepresentation are there?

There are three basic types of misrepresentation that can happen:

  • Innocent misrepresentation: The party who made the false statement thought what they were saying was true. For example, the Cadillac’s seller had misread “Elvis Priestly” as the more familiar “Elvis Presley” and genuinely believed that the musical legend was the car’s prior owner.
  • Negligent misrepresentation: The party who made the false statement believed what they were saying was true, but they hadn’t bothered to verify the facts. For example, maybe the seller was told that the Cadillac belonged to Elvis Presley, but they never checked the title history at all and merely repeated what they’d been told.
  • Fraudulent misrepresentation: The party who made the false statement knew perfectly well that they were lying. For example, the car seller knew that the Cadillac wasn’t owned by Elvis Presley, but the purposefully lied, hoping that the buyer wouldn’t notice the name discrepancy until later. If caught, they would have just claimed the buyer misheard them.

If your company has been the victim of fraudulent misrepresentation, you may have to sue to get back what you lost and any damages. Learning more about your legal options may provide some much-needed clarity.


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