Fraudulent misrepresentation is a legal term used in corporate law. In layman terms, fraudulent misrepresentation is to intentionally trick or cheat a person or company. However, to completely understand what it means, knowledge of legal terms and their meanings becomes necessary. In this case, the term “representation” refer to a statement released by a singular or collective parties under scrutiny. This statement is a further explanation of the contract but it’s actual details are not provided by the contract. Thus, a misrepresentation by definition is a false representation of a fact to make the contract whole.
Types of Misrepresentation
Here are three different ways fraudulent misrepresentation is carried out:
- Innocent – this type of Misrepresentation as the title states is when a party is ignorant of the correctness of a statement or there is no ill intent behind such a statement.
- Negligent – such a misrepresentation is when no heed is paid while giving a statement and is a product of mere carelessness.
- Fraudulent – as far as this type of Misrepresentation is concerned, unlike the other two, this statement is intentional and with ulterior motive that may harm the other party or parties concerned. Thus if a transaction has been carried out with the full disclosure of its content and purpose, then a fraudulent misrepresentation has occurred which makes the convicted party liable to punishment.
Main Elements of a Fraudulent Misrepresentation
There are certain elements that define a fraudulent misrepresentation. These will be common in all such transactions.
- False representation: this makes the crux of a fraudulent misrepresentation. One of the parties involved has to make a false statement with the knowledge that it is false.
- Association with other parties: the presence of another affected party is another important element. There is no fraudulent misrepresentation if no one has effectively had to bear any consequences or has been affected by the untrue statement. For instance, if a seller is selling a product on the basis of a false claim and you do not buy it and it does not affect you in any way, there is no case of fraudulent misrepresentation.
- Potential Damage: there has to be some kind of damage done to the other party concerned on whose basis the victim can file a case. If there is no damage, there is no case.
- Interrelation of the misrepresentation and transaction: the false statement made by the fraudulent party has to be in some way associated with the transaction. If the misrepresentation has got nothing to do with the transaction, then there is no case.
- Intent: the intention of the fraudulent party has to be apparent. The lie or twisting of facts should have a strong, ulterior motive of tricking another party.
- Consciousness of the Falsehood: the fraudulent party has to be conscious of the lie being told partially or completely. They have to be sure that it is untrue.
All fraudulent misrepresentation cases have to contain the above elements for them to be successfully filed under this category.
Albert Mackenzie is a stocks trader and a proud parent of two. He advises to look into this website for any issues pertaining to fraudulent misrepresentation, being a victim of the issue himself.