What are the Elements of Misrepresentation?
The elements of misrepresentation are the individual component arguments that must be proved in order to win a misrepresentation case under the tort of deceit.4 min read
The elements of misrepresentation are the individual component arguments that must be proved in order to win a misrepresentation case under the tort of deceit. Each element corresponds to a different aspect of a misrepresentation. Importantly, all misrepresentation claims should address the elements below.
A Party Made a Representation
A representation is a statement of fact. The term "statement," however can be treated broadly. For example, a statement may refer to an action, silence, gesture, and so forth. For example, in one court of law, the act of painting over mold in a building was construed to constitute a statement.
In addition, the statement must be of fact. Statements of opinion do not constitute a statement of fact. For example, the statement "you'll love this car" is not a statement of fact and accordingly, would not constitute a representation. One caveat to this rule occurs when it can be proved that the party making a statement of opinion could have explicitly known the facts of the case. If, based on those facts, the statement of opinion is clearly false, then the statement of opinion may be treated as a statement of fact.
Similarly, statements of the future do not constitute a statement of fact, as future performance is simply a prediction. One caveat to this rule is when the statement of fact is included in the contract. Then, the statement of the future may be binding, and the party making the statement of fact may be held liable for the statement. In addition, if the party making the statement of the future knows that his statement has persuaded another entity to enter into a contract and knows that the statement is false, then the party may be held liable for the statement of the future.
In addition, the statement must be material. In particular, the statement must have persuaded the plaintiff to have entered into a contract. In some courts of law, the plaintiff must also argue that the statement would have persuaded a "reasonable person" to enter into a contract.
The Representation is False and Directly Affects the Contract Agreement or Your Decision to Enter into It
There are several caveats to this rule, however. For example, false statements of the law do not satisfy the elements of a misrepresentation. In particular, every person is expected to be knowledgeable about the law.
In addition, silence does not typically meet the elements of a misrepresentation. Common law includes the notion of the maxim caveat emptor that implies that a party does not have a duty to disclose apparent defects voluntarily. Accordingly, if a plaintiff's misunderstanding led him to agree to a contract that was against his interests, typically, a defendant is not liable for the plaintiff's misunderstanding even if the defendant chose to remain silent about the misunderstanding.
The Representation, When Made, was False
A defendant may be liable for disclosing information in a misleading way. For example, if a defendant only partially discloses information, then the defendant may be liable. In addition, if a situational change makes a previously disclosed statement false, the defendant is responsible for informing the plaintiff that the disclosed statement is now false.
Further, if the defendant has a fiduciary responsibility to the plaintiff or has additional access or knowledge of material facts, then the defendant is liable for not disclosing those material facts. Material facts may include any factual information that could affect a plaintiff's decision in determining whether or not to agree to a contract.
Types of Misrepresentations
If the defendant either knew that the representation was false or recklessly made a representation without knowing the truth, then the representation satisfies the elements of a fraudulent misrepresentation. Fraudulent misrepresentations are the most serious type of misrepresentations. The typical legal remedies include rescinding a contract and awarding damages to the plaintiff.
If, however, the defendant simply had no reasonable grounds for holding the misrepresentation to be true, then the representation satisfies the elements of a negligent misrepresentation. Negligent misrepresentations may be violations of the tort of negligence in addition to the tort of deceit. The typical remedies for negligent misrepresentations are rescinding a contract and awarding damages to the plaintiff.
If the defendant did not know that the representation was false, then the representation satisfies the elements of an innocent misrepresentation. The typical legal remedies for innocent misrepresentations are only the award of damages. Contracts are often not rescinded.
For all types of misrepresentations, the plaintiff must prove that he relied on the misrepresentation when deciding to agree to a contract. For example, if you prove that a defendant made a false misrepresentation, but cannot prove that you relied on the defendant's misrepresentation, then, typically, you will lose the case. In addition, the misrepresentation must have caused you a loss. Losses are interpreted broadly, however, so even losses due to the opportunity cost of losing access to money or losing time may satisfy the loss requirement in some courts of law.
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