Also known as:facts material to risk · fact material to the risk · material fact
Written by attorneys · grounded in primary & secondary sources — see below
A fact that a reasonable person would regard as important in assessing the level of risk presented by a transaction or decision. Such a fact influences whether a party would proceed on the same terms or at all.
Sources & Authorities
How it applies
Common Examples
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Summary Judgment on Undisclosed Coverage
Fabian Flynn sought to switch his commercial policy and relied on an insurance broker's statement that cyber-interruption coverage was already included. The broker's statement proved false because the policy excluded that coverage absent a later rider. Flynn sued for misrepresentation. The insurer moved for summary judgment, but the court denied the motion because the existence of immediate coverage was a fact material to risk that a reasonable business owner would weigh in deciding whether to switch carriers.
Lawyer's Duty to Correct Tribunal Statement
Flora Ford's lawyer assured an environmental board that monitoring data showed no regulatory exceedances. After the hearing the lawyer received a report revealing one well had recorded a single exceedance. The lawyer realized the prior assurance was inaccurate. Because the exceedance reading was a fact material to risk of contamination that could affect the board's permit conditions, the lawyer was required to correct the statement to the tribunal.
Select any source to read its text and confirm it supports the definition.
Statutes
Federal Rules
Uniform Acts
Model Codes
Restatements
Dictionaries
Fraud in Donative Transfer
Frederick Ferguson told his elderly aunt that a particular investment carried no risk of loss. In reality the investment had already suffered substantial declines that Ferguson knew about. Relying on the statement the aunt transferred valuable property to Ferguson. The false statement concerned a fact material to risk that induced the aunt to make a transfer she would not otherwise have made, supporting a claim that the transfer was procured by fraud.
Product Misrepresentation Liability
Frostline Textiles advertised its industrial fabric as fire-retardant to the required regulatory standard. In fact the fabric had never been tested to that standard. A purchaser used the fabric in a warehouse and suffered fire damage. The false advertising statement addressed a fact material to risk of fire loss that a reasonable buyer would consider in deciding whether to purchase the product.
Failure to Disclose Client Fraud
Francois Fortier represented a client selling equipment. The client had falsified safety test results to hide a known explosion risk. Fortier learned of the falsification but said nothing to the buyer. The undisclosed test results were a fact material to risk of catastrophic failure that disclosure was necessary to avoid assisting the client's fraud.
False Statement to Third Party
Fiona Foster told a prospective purchaser that a commercial building had never experienced flooding. In truth the building had flooded twice in the prior five years. The purchaser relied on the statement and bought the property. The flooding history was a fact material to risk of future water damage that made the statement actionable under the rule against false statements of material fact to third persons.
Common questions
Frequently Asked
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How does a court determine whether a fact is material to risk in a misrepresentation claim?+
A fact is material to risk when a reasonable person in the recipient's position would attach importance to it in deciding how to act in the transaction. Courts apply an objective standard focused on the significance of the fact to risk assessment rather than the plaintiff's subjective views alone.
Supporting sources
Does a lawyer's duty to correct a false statement extend to facts material to risk discovered after testimony?+
Yes. Once a lawyer learns that a prior statement to a tribunal was false on a fact material to risk, the lawyer must take reasonable remedial measures including correction. The duty continues until the proceeding concludes even if the lawyer did not know the falsity when the statement was made.
Supporting sources
Is a single data point ever a fact material to risk that triggers disclosure?+
A single data point can be material to risk when it directly contradicts a categorical assurance given to a tribunal and bears on the central issue before the decision-maker. Expert analysis that the point is an anomaly may weigh against materiality but does not automatically eliminate the duty to correct.
Supporting sources
424 U.S. 1 (1976)Legislation and Regulation
…the Commission under this subtitle, or to include in any evidence, books, or information so furnished any misrepresentation of a material fact, or to falsify or conceal any evidence, books, or information relevant to a certification by the Commission or an examination and audit by the Commission under this chapter; or (B) to fail…