Updated October 27, 2020:

Innocent misrepresentation examples include a seller unknowingly offering defective merchandise, or if a person on Craigslist sells a used TV but does not know it’s broken. Misrepresentation is a legal term meaning a false statement that has an impact on a contract. For instance, a seller who tells a buyer that a stereo system is brand new, when in fact it is five-years-old and has been used by other owners, this would constitute an innocent misrepresentation if the seller was unaware of the stereo’s history.

Misrepresentation is one of three legal forms of misrepresentation when discussing contract law. This form of misrepresentation boils down to a person who had sufficient reason to believe that what he or she was conveying to another party was true at the time.

For example, if a seller did not know that the stereo was old, he would be held accountable under innocent misrepresentation.

With that, it is usually the case that since two forms of misrepresentation, fraudulent and negligent, tend to be harder to prove in court, innocent representation would be easier to prove. Under innocent misrepresentation, plaintiffs cannot prove a defendant acted in a fraudulent manner but can still form a foundation to recover losses and damages when necessary.

Another example is if a plaintiff cannot prove that the following statement from a car salesman was deliberately fraudulent: “This car has never been in a wreck.” Rather, a car salesman could say that he was unaware that the car in question had been damaged previously in an accident. Innocent misrepresentation could be invoked, and the judge would rescind the contract.

In this case, the seller overvalued the vehicle based on the belief that the car had never been in an accident, while the buyer who purchased the car believed that it was never damaged. Both parties acted on the knowledge they believed was true.

Innocent Misrepresentation Laws

Innocent misrepresentation laws vary across state lines, but you should be aware of the core attributes that constitute innocent misrepresentation. A person must make a false statement that must be untrue during the transaction, and the statement should remain untrue. Moreover, the statement must be pertinent to the transaction and must remain an important component throughout the transaction.

For example, if Jim sells a car and says it has 30,000 miles, when in fact it has 30,124 on it, this would not be an important part of the transaction. However, if that same car had 150,000 miles on it, it would be much more impactful.

In addition, the opposing party must heavily rely on the false statement, which means that he or she would not go through the transaction without the untrue information. If a buyer would have purchased an item regardless of what a seller said, this would not qualify as innocent misrepresentation. Overall, the buyer must heavily rely on a falsehood to have legal standing in court.

The misrepresentation must also cause harm or damage in some capacity, meaning that the buyer must suffer a loss during the transaction to win a case.

Also, the misrepresentation must benefit one party to the detriment of another. This is an odd requirement, but the courts uphold such a standard nevertheless. The person who stated the falsehood must benefit in some capacity, and the opposite party must suffer a loss.

Misrepresentation Civil Law

Misrepresentation cases are relegated to the civil courts. The criminal court system has an equivalent known as a false pretense, and it comes with varying degrees of intent. In civil court, misrepresentation cases are usually settled via rescission, which is the revocation of a contract. This allows all parties to revert to a state before an agreement existed.

For example, Mike sold Ted a stereo for $100, claiming it was fully operational. Ted bought the stereo based on that information, but the stereo turned out to be defective. Therefore, the court rescinded the agreement, Ted got his money back, and Mike got the stereo.

In other cases, a new contract will be drawn up considering new information, if parties are still willing to proceed with a deal. A court may also award monetary damages based on the severity of the situation.

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