When parties enter into a contract, they have an obligation to be truthful. If an individual or someone representing a business fails to disclose relevant information or claims to have qualifications they don’t have, they could be guilty of “fraudulent misrepresentation.”
This is the case even if they made these misrepresentations verbally but not in writing before the contract was signed. When a party to a contract does this intentionally and this misrepresentation harms a business, that business may have grounds for legal action.
Examples of fraudulent misrepresentation
Say an equipment vendor contracts with a business to sell them a particular product, but they fail to disclose that the product is about to be recalled for safety issues. Maybe a contractor is selected to renovate a portion of a hotel, but that contractor doesn’t disclose that their license has lapsed or been revoked.
Even if a party makes assertions they aren’t sure are true, that could qualify as fraudulent misrepresentation. For example, maybe the owner of a plumbing company says they’ve served hundreds of apartment complexes throughout the state, but they’ve never verified that this is accurate.
Recovering damages
The party that was harmed can seek to recover financial damages in a fraudulent misrepresentation lawsuit. If the misrepresentation was done with the intention of causing harm or was particularly egregious, it’s also possible to seek exemplary (punitive) damages under Texas law.
It’s crucial for anyone who believes they have been harmed by another party’s fraudulent misrepresentation to get experienced legal guidance as soon as possible. This can help stem any further losses and improve the chances of getting the compensation needed to cover losses and damages.