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Contracts And Fraudulent Misrepresentation

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Contract law governs the exchange of terms between two or more parties to ensure that all involved parties are held responsible for adhering to the mutually agreed-upon conditions. Fraudulent misrepresentation may lead to invalidation of the contract and potential legal disputes. The business litigation and employer defense attorneys with Schwab & Gasparini understand the complexities of dealing with fraudulent contract misrepresentation. Learn how a New York business litigation & employer defense attorney can help protect your rights in a fraudulent misrepresentation case. Contact us at our offices in Syracuse at (315) 422-1333, in Albany at (518) 591-4664, or in White Plains Office and Hudson Valley at (914) 304-4353. 


Does Fraudulent Misrepresentation Make a Contract Void?

Fraudulent misrepresentation can indeed render a contract voidable, meaning it can be canceled or rescinded due to the deceitful actions of one party. In such cases, the innocent party may be able to terminate the contract and seek legal remedies for any damages incurred due to the misrepresentation. The misrepresentation must significantly impact the agreement to pursue a legal action claim. To assess whether a contract can be invalidated due to fraudulent misrepresentation, it is crucial to examine the circumstances surrounding the misrepresentation and evaluate its impact on the agreement.


How To Prove Fraudulent Misrepresentation in a Contract

To prove fraudulent misrepresentation in a contract, the following factors must be established, according to Cornell Law School's Legal Information Institute:

  • False Representation: The party making the misrepresentation must have made a false statement. This representation may have been made through words, actions, or silence when there was a duty to speak.
  • Knowledge of falsity: The party making the misrepresentation must have been aware of the statement's falsity or acted recklessly without knowledge of the truth.
  • Intent To Deceive: The misrepresentation must have been made to deceive the other party, inducing them to rely on the false information.
  • Justifiable Reliance: The innocent party must have reasonably relied on the misrepresentation, being unaware of its falsity.
  • Damages: The innocent party must have suffered damages due to their reliance on the fraudulent misrepresentation.

Proving these elements can be complex. Businesses concerned that they have been the victims of fraudulent misrepresentation and those accused of misleading the other parties to a contract may find it helpful to consult with an experienced business litigation attorney. A member of the contract law team at Schwab & Gasparini can advise you regarding your legal options.


Five Types of Mistakes That May Invalidate a Contract

Aside from fraudulent misrepresentation, contracts can be invalidated due to various mistakes. Not all mistakes will automatically invalidate a contract. The severity and impact of the mistake and the circumstances surrounding it are factors that courts consider when determining the contract's validity, and in cases where the error is not substantially harmful to the interests of any party to the contract, even a mistaken party may prefer to exercise the right to variation by an agreement under the Uniform Commercial Code of New York. The legal consequences of these mistakes, apart from contract invalidation, vary depending on the error. 

Mutual Mistake

A mutual mistake occurs when both parties share a mistaken belief about a fundamental aspect of the contract. This mistake can include a misunderstanding of facts, terms, or conditions. If such a mistake exists, it may render the contract voidable, so either party can cancel or void it.

Unilateral Mistake

This denotes a mistake by one party that the other party is aware of but fails to correct. For example, if a person misunderstands the terms or is unaware of certain important details, it could lead to a unilateral mistake. In most cases, a unilateral mistake only invalidates the contract if it is clear the party not mistaken was aware of the mistake and took advantage of it.

Mistake in Identity

This occurs if a party mistakenly believes they are entering into a contract with a different person or entity. If Party A intends to contract with Person X but mistakenly contracts with Person under the impression that Person Y is Person X, then a mistake in identity has taken place. The contract may be void or voidable in such cases, attracting a legal case.

Mistake in Terms

This is when there is a misunderstanding or discrepancy regarding the contract's exact terms. If both parties agree on the basic terms but have different interpretations of specific clauses, this difference in interpretation can lead to a mistake in terms. If the mistake significantly affects the agreement, it might invalidate the contract or make it voidable.

Mistake in Value

A mistake in value is an error in estimating the value or quality of the subject matter of the contract. This mistake often involves subjective judgments rather than objective facts. Generally, a mistake in value does not invalidate the contract as long as the parties freely agreed to the exchange and fraudulent or deceptive practices did not induce the mistake.


How We Can Help

If you find yourself involved in a contract dispute involving fraudulent misrepresentation or if you are party to a contract whose agreement was predicated on a mistake, seeking prompt legal guidance can help you evaluate your options and choose the best course of action available for your situation. Understanding your rights and having legal representation on your side can facilitate both negotiating resolutions to contracts signed as the result of a mistake and litigating allegations of fraudulent misrepresentation if necessary. 

Here are four ways in which a skilled attorney can help:

  • Expert Legal Advice: An experienced business attorney specializing in contract law understands the complexities of proving fraudulent misrepresentation. They will be able to evaluate your case, analyze the evidence, and provide legal advice tailored to your situation. A contract attorney's expertise can make it significantly easier to make informed decisions as your matter moves forward.
  • Case Evaluation and Strategy: An attorney will thoroughly evaluate your case, assessing the strength of your claim or any claims against you and identifying the elements needed to prove fraudulent misrepresentation. They will develop a solid legal strategy to maximize your chances of seeking compensation, defending against the allegations, or rescinding the contract altogether, depending on the particulars of your situation.
  • Negotiations and Settlements: In many cases, fraudulent misrepresentation claims can be resolved through negotiations or settlements. A New York contracts and fraudulent misrepresentation attorney will represent your best interests during these discussions and advocate for a fair resolution. Often all parties can reach a favorable outcome without lengthy court proceedings.
  • Litigation Representation: If your case proceeds to litigation, a fraudulent misrepresentation lawyer will present your case in court, cross-examine witnesses, and present arguments on your behalf. 


Seek Legal Guidance

If you believe you have been a victim of fraudulent misrepresentation or require assistance with any aspect of contract law, contact Schwab & Gasparini today. Our experienced business attorneys can provide the necessary guidance and representation for cases involving fraudulent misrepresentation, contract disputes, and related matters. You can reach our Syracuse office at (315) 422-1333, our Albany office at (518) 591-4664, and our White Plains and Hudson Valley offices at (914) 304-4353. Our dedicated team is ready to provide professional advice tailored to your specific needs.

Mon Aug 14 2023, 12:00am