Misrepresentation in a Contract

If a party was dishonest about a material fact during the drafting process of a contract, the other party may be able to take the contract to court and argue that it should be rescinded, or cancelled, due to misrepresentation.  Moreover, if the honest party performed the contract because he, she, or it justifiably relied on the misrepresentation in a contract of material fact, he, she, or it may be able to collect damages if a court finds that the non-breaching party was damaged by the misrepresentation, or that the misrepresentation was intentional.

Misrepresentation in a contract circumstance occurs when a party to a contract makes a representation, using either words or conduct that communicates a false or misleading understanding, thereby inducing another party to sign a contract.  For example, if a seller of goods makes false statements or promises about the quality or nature of a product to get a consumer to agree to purchase it, that could constitute misrepresentation.

There are different types of misrepresentation in a contract, including fraudulent misrepresentation and negligent misrepresentation.

Fraudulent misrepresentation may be found where a knowingly false representation was made with the intent to deceive.  As mentioned earlier, if an individual justifiably relies on an intentionally made fraudulent misrepresentation and is harmed as a result of this reliance, they may recover damages to be compensated for their harm, which may include punitive damages.

Negligent misrepresentation occurs when a representation is made carelessly. Damages are generally available for negligent misrepresentation, however punitive damages will not be awarded in a negligent misrepresentation case.   Additionally, in the event that misrepresentation can be proven, rescission may be granted, which would release the parties from their contractual obligations.

Ezer Williamson Law provides a wide range of both transactional and litigation services to individuals and businesses. We have successfully prosecuted and defended various types of business, contract, and property claims. Contact us at (310) 277-7747 to see how we can help you with your business law needs.

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