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Fraudulent misrepresentation is bad business

On Behalf of | Aug 25, 2022 | Business Litigation

Business owners in Ohio often enter into relationships with vendors or sales persons for the purposes of conducting business together. Many of their transactions are spelled out in detail to ensure that the both parties fully understand their obligations and responsibilities in the exchange. This mutual understanding is the foundation on which the tenets of the contract are built.

What is fraudulent misrepresentation?

When two or more parties enter into an agreement, it is assumed that the material facts of the agreement are intelligible. What the parties sign off on is the reasonable expectation of what they will each get in the agreed upon exchange.

When one of the parties knowingly or unknowingly misrepresents the substantial facts of the exchange, the element of fraud is present. When fraud is discovered in these agreements, legal accountability may be an option.

Fraudulent misrepresentation of the facts can impact the integrity of a contract. Where the fraud is present in a contract, the injured party can sue for damages in a court of law if legally proven. Upon filing a lawsuit, the plaintiff must show that it did not receive what was agreed to in the contract. Or, the fraud involves false claims of a product or service. If the defendant induced the plaintiff into an agreement with exaggerated claims of performance, that could be material or significant to show economic injury.

How is fraudulent misrepresentation proven?

To constitute a legal ground for fraudulent misrepresentation, several factors must be proven:

  1. A claim or factual representation was made.
  2. The claim was not true.
  3. The claim was a deliberate misrepresentation of facts.
  4. The plaintiff depended on stated facts.
  5. Defendant induced plaintiff with material fabrication of facts.
  6. The plaintiff suffered economic or other injury as a result of misrepresentations

Upon the legal establishment of fraudulent misrepresentation, the offended party may be able to rescind or rectify the contract.