Business law and fraudulent misrepresentation


Louisiana businesses must be aware of the various pitfalls that they can face as they run their operations. Trusting others to behave within the law and follow through on agreements as they are laid out is a mistake that can be costly in the short and long-term. One issue that businesses must be cognizant of is fraudulent misrepresentation. When there is an agreement between parties, it should be done with a contract. Both parties are expected to act in good faith. However, if one says something that is false or misleading to get the other to agree to the contract and does harm, there could be the basis for a legal filing due to fraudulent misrepresentation.

All parties must agree to the terms of the contract for it to be considered valid. If there are terms that are inaccurate, then any agreement within the contract will be based on a false premise and therefore invalid. If there are false statements made in any way, it will be considered false representation. There can also be negligent misrepresentation if a party did not ensure the accuracy of that which was represented. Innocent representation is not negligent nor fraudulent.

For there to be fraudulent misrepresentation, six elements must be proven. A representation must have been made; it had to have been false; it was either known to be false or was made recklessly without knowing if it was true or not; it was made with the intention that the other party would rely on it; the other party relied on the representation; and the other party suffered damages due to relying on the representation.

This can be rectified by rescinding the contract since fraudulent misrepresentation makes the contract voidable. This will restore the matter to before the contract was done. Losses can be claimed by the damaged party. When there is an allegation of fraudulent representation in a contract dispute, it is imperative to have experienced legal assistance to handle the matter. An attorney who is skilled in business law can help with a case.

Source: findlaw.com, "Fraudulent Misrepresentation," accessed on Nov. 7, 2017

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