Damage Control In Fraudulent Misrepresentation Cases

Fraudulent misrepresentation is knowingly using a false statement to trick a second party that in turn incurs damages. The false statement has to be somehow related to the transaction made between the two parties and the fraudulent party must consciously be aware of the falsehood. If these requirements are met, a fraudulent misrepresentation case may be filed.

How To Resolve Fraudulent Misrepresentation?

There are two main ways in which the affected party can rectify the situation. These two have been mentioned below:

  1. Rescission – the act of rescission is referred to as the annulment of a contract. If a contract has been cancelled, it means all terms binding two parties together do not hold true anymore either. The most common prey of fraudulent misrepresentations is the insurance companies that receive falsely filled forms. When the insurance company finds out that information provided by a certain client is false, it cancels the insurance through the legal act of rescission. After rescission, the insurance companies owe nothing to the client and during the contract, if the client has managed to get any benefit, financial or otherwise, he/she is required to return it.
  2. Paying Damage – let us supposed that you work for an event management company. It generally required nicely dressed employees who can represent the company well. For this, you buy a suit that the store owner claims is made of the highest quality cloth and stitched to perfection. He knows that it is not the truth but lies nonetheless to make you buy the suit. At the event, the jacket of the suit gets ripped off when you raise your arm for the toast. Your boss resultantly fires you for making him look like a cheapskate and embarrassing him. If you file a case, the store-owner will have to pay a compensation ordered by the court equivalent to the loss of your job because the intentional lie he spoke to make his sale was responsible to get you fired.

Example of Fraudulent Misrepresentation

To understand exactly how fraudulent misrepresentation works, it is imperative to know a few examples.

So, for starters, X is looking for an apartment and finally finds one that fits his needs and budget. The apartment X likes belongs to Y. X asks Y of the general condition of the house and if there are any leakage problems. To this, Y keeps you from the truth even though he knows that the house has leakage problems.

So, you sign the legally binding contract and buy the apartment. Upon shifting, you find out that the apartment has leakage problem and Y lied to you. Here you can file a case of fraudulent misrepresentation. In such a case, the contract that X signed with Y will become void and Y will have to return the money to X because Y intentionally conned X into buying an apartment with leakages so he could make a sale.

Another case is if Y actually is unaware of any leakage issues in the apartment. Either way, the contract becomes void.

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