Fraudulent Misrepresentation
Understanding this complex area of law comes from experience and Tenet has successfully managed a number of fraudulent misrepresentation claims involving property purchases, business acquisitions and investment in private companies through share purchases.
Misrepresentation claims are the result of an untrue statement made by one party to another inducing that party to enter into a contract which ultimately causes them loss.
The statement can be made knowingly (dishonestly) or recklessly (not caring whether the statement is true or not). It is the dishonesty that makes it a fraudulent misrepresentation, and this is where our expertise can help.
The four elements to a claim in fraudulent misrepresentation are:
- The defendant makes a false representation to the claimant.
- The defendant knows that the representation is false, or they are reckless as to whether it is true or false.
- The defendant intends that the claimant should act in reliance on it.
- The claimant does act in reliance on the representation and, as a result, suffers loss.
The claimant must have been influenced by the misrepresentation, however that influence does not need to be the only factor that led the claimant to enter into the transaction they now complain about.
Often fraudulent misrepresentation is used in claims where there is no contractual claim available, there is a limit on liability of the selling party or what is known as an ‘entire agreement clause’ in a contract that stops a purchasing party from makings claims for incorrect representations of fact about the sale unless they were written into a contract.
Knowing when it may be sensible or an option to bring a claim in fraudulent misrepresentation is not simple, and Tenet’s experience in advising clients on these types of claims can help you navigate your next steps.
Fraudulent misrepresentation claims also focus on the individual wrongdoer, for example, if a company was making the sale which was misleading, but one of their directors made the false representations, the director may be personally liable as well as the company. This is known as ‘piercing the corporate veil’ and can assist with recovery or encouraging early settlement.
Understanding this area of law comes from experience and we have been successful in managing several cases of this type to achieve a positive outcome for our clients.
This includes property purchases, acquisition of businesses (via share purchase agreements) and being duped through misrepresentations to enter into contracts which would have best been avoided, for example, other forms of financial or asset investments.
The key to unlocking a claim in fraudulent misrepresentation is to identify precisely what has been represented and then assess whether the defendant could have held an honest belief in the statements made. We will investigate your case from that initial starting point.
If you believe that you or your organisation might have been misled when entering into a transaction or agreement, Tenet can help. With our experience and specialist knowledge our team can guide you through the process, assessing the strength of your claim and advising you on how best to pursue it.
To discover more about the world of financial crime and fraud please see our Fraud Hub.
