As a business owner, you rely on contracts with vendors, clients, employees, independent contractors, landlords and more. If someone violates the terms of a contract and causes harm to your business, you can sue them for breach of contract. They can do the same if you don’t hold up your end of the contract.
What happens, however, if someone wasn’t entirely honest with you when you both signed the agreement? Maybe a vendor claimed to have skills or products to provide that they didn’t. Maybe someone claimed to be licensed in their field when they weren’t. Maybe they showed you a portfolio of their work that was completely fake.
These are a few examples of something called “fraudulent misrepresentation.” When a party to a contract is guilty of that, then the contract can be voided because it was signed based on false pretenses. The victim of his misrepresentation can also seek damages.
Fraudulent misrepresentation doesn’t have to be a known false statement in writing
Fraudulent misrepresentation doesn’t have to be done in writing. Even if one party verbally makes false statements, fails to disclose relevant information, discloses only part of the truth or says things that they don’t know for certain to be the truth, they can still be found liable.
To hold a party liable for fraudulent misrepresentation, you would need to show that what they misrepresented was material (relevant) to your signing the contract with them. You also would need to show that you suffered damages as a result of that misrepresentation.
If you’re suing someone for fraudulent misrepresentation (or negligent or reckless misrepresentation), you need to determine what remedies to seek. You make seek to void (or rescind) the contract. You will likely want to seek damages for your losses. Maybe you lost business because you made commitments based on your contract with a vendor. Maybe they did work that was so poor that you need to have it destroyed and hire another contractor.
Every situation is unique. Your best first step, if you believe that someone with whom you have a contract misrepresented themselves or their business and you suffered harm as a result, is to seek experienced legal guidance.
