Also known as: fraudulent representations · fraudulent misrepresentation
Written by attorneys · grounded in primary & secondary sources — see below
An assertion of existing fact that the maker knows is false or knows lacks the factual or analytical basis asserted or implied. The assertion must be made with intent to induce the recipient's assent to a transaction. Justifiable reliance by the recipient on the assertion is required.
Francesca Fiore purchased a commercial property from Falcon Dynamics after the seller's agent stated that all structural reports confirmed full code compliance. Fiore never requested the reports herself. When hidden violations later surfaced, her reliance remained justified even though an investigation would have revealed the falsity.
Fatou Fall agreed to buy equipment from Franklin Foundry after the seller claimed every unit met the newest efficiency standard. Fall had already reviewed internal memos showing many units used outdated parts. Because the falsity was obvious to her, she could not claim justifiable reliance.
Select any source to read its text and confirm it supports the definition.
Frank Fisher bought shares in Frostline Textiles after its CEO asserted that all pending contracts were fully funded. Fisher knew the CEO had a personal stake in closing the deal. The belief that the CEO held an adverse interest did not prevent justifiable reliance on the factual assertion.
Frederick Ferguson contracted with Fairfield Bank after a loan officer opined that the collateral would retain full value for five years. The officer possessed internal valuation data showing rapid depreciation that Ferguson lacked. The opinion carried the weight of a factual assertion because the officer purported special knowledge Ferguson did not have.
Floyd Franklin retained Fabian Flynn, an independent appraiser, who stated that a warehouse was worth at least two million dollars. Franklin reasonably believed Flynn had no stake in the sale price. The opinion supported justifiable reliance because Flynn appeared disinterested and the valuation was material to the purchase decision.
Falcon Dynamics sold a machine to Francesca Fiore after falsely stating that safety certifications were current. Fiore failed to notice missing paperwork in the file. Her contributory negligence did not prevent recovery once she justifiably relied on the fraudulent assertion.
A misrepresentation becomes fraudulent when the maker intends to induce assent and knows the assertion is false or knows he lacks the basis he claims or implies. The maker's knowledge that he has no actuarial analyses, engineering reports, or trial data supporting his statement satisfies this element even if the statement is framed as an opinion.
Supporting sources
No. The misrepresentation is fraudulent once the maker intends to induce assent and knows the assertion lacks the claimed basis. Avoidance is available even if the transaction later proves economically neutral.
Supporting sources
Reliance on an opinion is justifiable when the recipient reasonably believes the speaker is disinterested and the fact is material, or when the speaker purports special knowledge the recipient lacks or stands in a relation of trust and confidence.
Supporting sources
…to the public good as to compel an adjudication of its invalidity. The defendants contend that (1) there is no proof of any fraudulent representations made by the salesman, (2) the warranty and disclaimer of liability contained in the purchase order constitute a complete defense to the action, (3) the warranty does not extend to "defects…