Also known as: actions of deceit · deceit · tort of deceit
Written by attorneys · grounded in primary & secondary sources — see below
A common law tort action that allows recovery of pecuniary loss from justifiable reliance on a fraudulent misrepresentation of fact, opinion, intention, or law made to induce action or inaction.
Dana represented an insurer in settlement talks with unrepresented claimant Luis. She told him the offer reflected the maximum available coverage even though she knew an umbrella policy provided additional funds. Luis accepted and signed a release based on that statement. The misrepresentation exposed Dana to professional discipline for engaging in conduct involving deceit.
A salesman told Andre Antoine that a new vehicle had advanced safety features and had passed all quality inspections. Relying on those statements, Andre purchased the car. After an accident revealed manufacturing defects, Andre suffered financial loss from repairs and diminished value. The false statements about the vehicle's condition supported recovery of pecuniary damages in deceit.
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Arthur Abrams represented to his spouse Abigail Alvarez during settlement negotiations that the marital estate contained only listed accounts and properties. Abigail accepted the proposed division without knowledge of substantial undisclosed offshore holdings. After discovering the omissions, Abigail sought to set aside the agreement. The deceit provided grounds to invalidate the settlement even without proving unfairness separately.
Alice Atkins purchased shares after the seller falsely stated that pending regulatory approval would double the company's revenue. The approval never materialized and the shares declined sharply. Alice proved the misrepresentation was the legal cause of her loss. She recovered the difference between the purchase price and the actual value received plus consequential damages flowing from her reliance.
Alan Ackerman bought a vehicle after the dealer assured him it contained no prior collision damage and had never been repaired. The car later exhibited hidden structural defects traceable to an earlier unreported accident. Ackerman incurred repair costs and lost the benefit of a sound vehicle. The dealer's knowing false statements about the car's history supported an action of deceit for the resulting pecuniary harm.
Amber Alonzo purchased stock at an allegedly inflated price after corporate statements overstated the company's regulatory compliance. When corrective disclosures caused the price to drop, Amber claimed the initial misrepresentations caused her loss. The complaint required proof that the deceit, rather than other market factors, produced the economic harm. Without that causal link, recovery in the action of deceit would fail.
An action of deceit requires proof of fraudulent intent and produces damages measured by pecuniary loss, whereas rescission focuses only on the existence of a material misrepresentation and restores the parties to their prior positions without regard to fault.
The plaintiff may recover the difference between the value given and the value received plus any additional pecuniary loss that is a legal consequence of reliance on the misrepresentation.
Yes. A lawyer engages in professional misconduct by engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation even when the conduct occurs outside litigation or client representation.
Yes. Liability arises only when the plaintiff justifiably relies on the fraudulent misrepresentation and suffers pecuniary loss as a result.
…to § 10(b) and Rule 10b-5 has been based on doctrines with which we, as judges, are familiar: common-law doctrines of fraud and deceit. See, e. g., Santa Fe Industries, Inc. v. Green, 430 U. S. 462, 471-477 (1977). Even when we have extended civil liability under Rule 10b-5 to a broader reach than the common law had…