Misrepresentation is a false statement that one person makes to another and affects the second party's contract decision. If you suffer harm, say the loss of money, due to misrepresentation, you can hold the other party liable for your damages. Below are the three most common forms of misrepresentation.
Innocent misrepresentation arises when one party makes a false statement without knowing that the statement is false. The party making the false statement usually has reasonable grounds to believe that their statement is true.
Consider an example where you buy a false gold watch whose seller insisted was genuine. If the seller had the watch authenticated by an expert, then the authentication provides them with the basis to believe in the genuineness of the gold. In such a case, you can use innocent misrepresentation laws to claim damages against the seller since they didn't know the watch was fake.
For innocent misrepresentation, the party making the false statement must make reasonable steps to verify or authenticate their statement. For negligent misrepresentation, the party making the false statement doesn't attempt to authenticate their statement. Such a person is clearly negligent since they don't care whether their statement hurts you.
Continuing with the example of buying a fake gold watch, negligent misrepresentation arises if the seller doesn't try to authenticate the watch. Maybe the seller got the watch from a pawnshop and relied on the words of the pawnbroker. This is negligent because it is the duty of a seller to verify the authenticity of their wares.
Fraudulent misrepresentation occurs if one party intentionally makes a false statement – the liable party knows that the statement is false. Some contract parties make such statements to gain an unfair advantage over the other party. Others also make false statements because they know the other party might pull out if they learn the truth.
Still, with the example of the fake gold watch, fraudulent misrepresentation arises if the seller knows that the watch is fake but claims that the watch is genuine. Maybe the seller appraised the watch and the appraiser confirmed that the product is not genuine. The seller knows that you can pull out of the deal if you learned that the watch is fake — or lower your offer.
As you can see, misrepresentation can take many forms. If you have suffered damages due to misrepresentation, consult a law office like Winstein, Kavensky & Cunningham, LLC. to help you figure out how to proceed with the claim.
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