Innocent Misrepresentation: Everything You Need to Know
Innocent misrepresentation occurs when a person unknowingly conveys false information, an agreement depends largely on the goodwill and honesty of the parties.3 min read
Innocent misrepresentation occurs when a person unknowingly conveys false information. An agreement depends largely on the goodwill and honesty of the parties who agreed to the contract. If someone misrepresents a fact without suffering the consequences, few would enter agreements. Misrepresentation is a vital component in contract laws in many nations.
Misrepresentation is a false statement that convinces someone to enter into an agreement. For instance, if you told someone that a stereo is new, when in reality it is three-years-old and has been used, this would constitute misrepresentation. Further, to pursue claims against an individual, you must demonstrate that he or she used untruths to convince someone to enter an agreement, and that such misrepresentations led to damages in some fashion.
- Note: An opinion is not in the same boat as a fact, even if it’s rendered false. Also, it generally will not factor into cases involving misrepresentation.
In essence, a misrepresentation is stated by a person who had sufficient reason in believing that a false claim was indeed true.
- Example: If a seller was unaware a stereo was used and old, he could only be found accountable under innocent misrepresentation.
With that, you must also be aware of fraudulent and negligent misrepresentation, which are harder to prove in court. Therefore, innocent misrepresentation would be the best strategy when it comes to proving false statements in court.
- Example: A plaintiff could not prove that an auto seller misrepresented the following statement: “This truck has never been in a wreck.” A car seller can simply state that he or she was unaware that the truck had been in an accident. Therefore, innocent representation could be invoked, and the contract would be rescinded by a judge.
The seller placed value on a car based on the notion that it was never in a wreck, and the buyer bought the car based on the information that it was not in an accident previously. Overall, both parties understood the information they were privy to at the time, and neither party would have entered into the contract, or they would have settled for a lower price.
States vary when it comes to interpreting misrepresentation. However, you should be aware of essential attributes needed to make a case for innocent misrepresentation. A person must make a false statement during a transaction, and it should remain untrue. Further, the statement must be pertinent to the transaction, meaning that it must play a vital role in the deal.
- Example: If a person sells a vehicle and claims it has 20,000 miles, when in fact is has 20,112 miles on it, such misrepresentation would not be important. On the other hand, a vehicle that actually has 200,000 is more relevant.
In addition, the buyer must use the false representation as good enough reason to enter into a contract, otherwise they would have never done so in the first place. If a buyer would have purchased an item regardless of what was said, then innocent misrepresentation would not apply.
Moreover, the falsehood must cause damage in some form, and the buyer may litigate to recover any monetary damages if necessary. For instance, American corn growers could not sell corn that was grown from seeds bought from Syngenta.
Also, a party’s loss must benefit the opposite party. Though it is a vague mandate, it is one that courts usually uphold as a standard. In other words, the misrepresentation must benefit the person who made the false statement, otherwise a plaintiff has no case.
An innocent misrepresentation is relegated to civil court. In the criminal system, it is also called a false pretense, which also requires varying degrees of intent. When it comes to misrepresentation, the usual solution is to rescind the contract entirely. This means that a judge will revoke the agreement, and both parties will revert to a place before the contract existed.
- Example: John sells a stereo for $100 after telling the buyer it works properly. Joe, the buyer, believes John and buys the stereo only to discover that it’s broken. The deal gets rescinded, and Joe gets his money back.
If you need help with innocent misrepresentation, you can post your legal need on UpCounsel’s marketplace. UpCounsel’s lawyers have graduated from some of the top law schools in the nation and will provide more information on the ramifications of misrepresentation. Moreover, they will be at your side in court if you are a victim of false claims and need compensation.