Misrepresentation

Question 1

What are the two types of Misrepresentation?

Answer 1

1) Intentional (Fraud) 2) Negligent

Question 2

What is Misrepresentation?

Answer 2

The act of making a false statement as to a material fact upon which another party relies to his detriment.

Misrepresentation is an untrue or misleading statement of a material fact made during negotiations by one party to another.

Question 3

Within Misrepresentation, is there a general duty to disclose?

Answer 3

No

Question 4

Within Misrepresentation, what are the four exceptions to a duty to disclose?

Answer 4

1) Where a fiduciary obligation exists 2) Statements containing half-truths 3) Genuine belief that a statement was true but now knows statement is not true 4) Statements that were true but are not true now (and defendant knows plaintiff will rely on statement).

Question 5

Within Misrepresentation, what is a statement that contains a “Half-Truth”?

Answer 5

1) Giving partial information that is true that causes the plaintiff to believe that everything is true, or 2) a statement that is ambiguous or misleading

Question 6

Within Intentional Misrepresentation (Fraud), what is Active Concealment?

Answer 6

Active concealment refers to the situation where a party conceals any information as to a material fact which they have a duty to disclose.

Question 7

Within Intentional Misrepresentation (Fraud), is Active Concealment actionable?

Answer 7

Yes

Question 8

Within Intentional Misrepresentation (Fraud), what is Scienter?

What are the two elements of Scienter?

Answer 8

Scienter is the mental state of a person who intends to manipulate or defraud another person. It is the awareness or knowledge of wrongdoing.

When the defendant makes a statement 1) knowing it is false, or 2) with reckless disregard as to its truth or falsity

Question 9

Within Intentional Misrepresentation (Fraud), what is Actual Reliance?

How is Actual Reliance determined?

Answer 9

Actual reliance occurs when a party suffers a detriment by acting upon a misrepresentation.

Actual reliance is determined using a Subjective test

Question 10

Within Intentional Misrepresentation (Fraud), what causation is required to determine Actual Reliance?

Answer 10

But-for causation

Question 11

Within Intentional Misrepresentation (Fraud), what is Justifiable Reliance?

How is Justifiable Reliance determined?

Answer 11

Justifiable reliance refers to a person’s reasonable and justifiable dependence on another’s misrepresentation.

Judged Objectively (Reasonable person test)

Question 12

Within Intentional Misrepresentation (Fraud), will Justifiable Reliance be satisfied if the deceived plaintiff is lacking in mental capacity?

Answer 12

Yes

Question 13

Within Intentional Misrepresentation (Fraud), what are damage requirements?

Answer 13

Plaintiff must suffer actual pecuniary loss

Question 14

Within Intentional Misrepresentation (Fraud), what damages may the plaintiff recover?

Answer 14

Plaintiff may recover “benefit of the bargain” damages

Question 15

Within Intentional Misrepresentation (Fraud), what defenses are available?

Answer 15

None. There are no defenses to Intentional Misrepresentation (Fraud)

Question 16

What are the five elements of Negligent Misrepresentation?

Answer 16

1) Negligent misrepresentation by defendant 2) plaintiff is a known party that was intended to rely (includes third parties) 3) actual reliance (causation) 4) Justifiable reliance (reasonable) 5) damages

Question 17

What defenses are available for Negligent Misrepresentation?

Answer 17

Same rules as for Negligence

Question 18

With Intentional Misrepresentation (Fraud), how can inducement of reliance be shown?

Answer 18

By intent to induce the plaintiff to act or refrain from acting in reliance upon the misrepresentation.

Question 19

Within Intentional Misrepresentation (Fraud), how far does inducement of reliance extend beyond plaintiff?

Answer 19

Extends to all foreseeable plaintiffs

Question 20

What is Negligent Misrepresentation?

Answer 20

Negligent misrepresentation occurs when someone makes a statement without regard to the true facts. It is a statement of material fact that is false as the result of a party’s negligence, that induces another to act, and results in injury to the party relying on the statement.

Question 21

What is Intentional Misrepresentation (Fraud)?

Answer 21

The deceitful or fraudulent misrepresentation or false statement as to a material fact knowingly made (or failed to disclose) by the defendant resulting in monetary loss to the plaintiff.

Question 22

What are the six elements of Intentional Misrepresentation (Fraud)?

Answer 22

1) Intentional misrepresentation by defendant 2) Scienter 3) Induces reliance 4) Actual reliance (causation) 5) Justifiable reliance (reasonable) 6) Damages

Question 23

Within Intentional Misrepresentation (Fraud), how does fact vs. opinion help determine whether reliance was justified?

Answer 23

Reliance on fact is almost always justified. Reliance on opinion is usually not justifiable unless given by someone with superior skills in the area.