What is Misrepresentation?

A misrepresentation can involve a false or misleading statements used to encourage a party to enter into the contract. 

The two types of contract misrepresentation include:

  • Fraudulent misrepresentation is a knowingly false statement that is false or with reckless disregard for the truth.
  • Negligent misrepresentation is a false statement made without knowledge that it is false and without due care.

What are the Elements of Fraudulent Misrepresentation?

To be considered fraud, an entity or individual must purposefully or recklessly misrepresent a fact to convince another party to enter into the contract. The following factors must each be present or considered to establish fraudulent misrepresentation:

  • A party to the contract made a representation.
  • A condition or claim included in the contract was false.
  • The representation was material.
  • The party who made the representation knew it was false or was ignorant of its truth. 
  • The speaker’s intent was for the information to be acted upon and the representation was made in a reasonably calculated manner.
  • The hearer was ignorant of the information’s falsity.
  • The hearer relied on its truth.
  • The hearer’s right to rely on its truth.
  • The hearer’s consequent and proximate injury. 

Such misrepresentations can happen in several ways, including written or oral communications.

What are the Penalties for Contract Fraud?

Civil remedies for misrepresentation include actual damages, punitive damages, and potentially attorney fees, if sought or awarded by a court. Punitive damages serve as a punishment to the wrongdoer and to deter similar behavior in the future.

What are the Elements of Negligent Misrepresentation?

The following factors must each be present to establish negligent misrepresentation:

  • A duty requiring the defendant to conform to a certain standard of care.
  • A breach by the defendant of that standard.
  • A causal connection between the defendant’s conduct and the resulting injury.
  • Actual damages.

Whether a duty exists is a threshold question, which considers the relationship between the parties and any legal obligation on one party for the benefit of the other.

How Long Do You Have to File a Claim for Fraud?

The statute of limitations, or the time limit for bringing a claim for fraud, is typically three years, under Arizona Revised Statutes Section 12-542. Whereas the statute of limitations, or the time limit for bringing a claim for negligent misrepresentation is typically two years, under A.R.S. Section 12-543. Claims initiated outside of these timeframes may be barred by a court.

How to Avoid Fraudulent Misrepresentation?

To avoid any misrepresentations, consider:

  • When negotiating a contract, be intentional about your words and actions. Be sure to understand all of the terms of the agreement prior to signing.
  • Get everything in writing to help avoid disputes regarding what was said or agreed to.
  • Have an attorney at Resolvere Law, PLLC, review the contracts prior to signing to identify potential problems and assist in negotiating more favorable terms.

Do You Need an Attorney?

Fraud or fraudulent misrepresentation or a claim for negligent misrepresentation can be a confusing topic. If you have entered into a contract and believe you were somehow wronged, we are here to help. Call Resolvere Law, PLLC, today at 480-568-1327 or complete a contact form to receive your free consultation.