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Contracts make the business world go round. They set expectations amongst business partners, ensure that supply and demand are met, and ensure the free flow of goods and services across the country and internationally. While competent contract negotiation and drafting is pivotal to a successful contract, the bedrock of these agreements is honesty and trust. When one party to a contract fails to live up to those to characteristics, then legal action may be justified, especially if you and your business have been harmed.

This week, let’s take a look at one way that dishonesty affects businesses: fraudulent misrepresentation.

What is fraudulent misrepresentation?

Fraudulent misrepresentation occurs when a key fact is either untrue or misrepresented in a contract, thereby rendering the contract invalid. Contracts should be negotiated in good faith, and fraudulent misrepresentation violates that duty. But how do you prove fraudulent misrepresentation?

Proving fraudulent misrepresentation

There are several critical elements that you’ll have to show. To start, you’ll have to demonstrate that there was an actual representation and that the representation was either false or that it was made with reckless disregard with regard to determining the representation’s truth. This means that you’ll probably have to put in some work to discover the truth about the representation in question.

Then you’ll have to demonstrate intent, that being that the other party intended for you to rely on that misrepresentation. In regard to this element, many defendants argue that the misrepresentation was nothing more than a mistake. You’ll need evidence and strong arguments to prove intent.

After that, you’ll want to show detrimental reliance, meaning that you in fact relied on the misrepresentation when agreeing to the contract and that reliance caused you financial harm. Detrimental reliance is a key aspect of many contract disputes, so you should be ready with a clear indication of the damages that have been caused to you and your business.

Finding accountability and recovering compensation

A bad business deal can leave a bad taste in your mouth, but you shouldn’t let it just slip by without further action. Instead, you should carefully consider whether legal action is justified. After all, that may be the only way to find accountability and recover the compensation that you’re owed. If you’d like to learn more about how to do that, then it might be wise to discuss your situation with an a business litigation attorney that you trust.