Did you know that misrepresentation can nullify a contract? Continue reading to find out more.
Fraudulent misrepresentation is defined as any kind of false statement or lie that’s used to trick a person into signing an agreement. The misrepresentation can work in a number of ways, including spoken words, written words, body motions or gestures (such as a nod), and even through inaction or silence.
Misrepresentation only applies to statements of fact, not to predictions or opinions. Misrepresentation is a basis for contract breach in transactions, regardless of its size. For instance, a seller of an automobile can misrepresent the number of miles to a potential buyer, which can cause the person to purchase the car. If the buyer later discovers that the vehicle had run a higher number of miles than represented, they can sue the seller.
There are essentially three different types of misrepresentation.
Innocent Misrepresentation – a person makes a false statement at the time of signing the contract without knowing that the information wasn’t accurate.
Negligent Misrepresentation – a person fails to verify the authenticity of the information before signing a contract.
Fraudulent Misrepresentation – A person knowingly and intentionally makes a false statement to encourage the other party to sign a contract. Such misrepresentation can nullify a contract and make the wronged party eligible to receive damages from the defendant.