A lot of small businesses in Illinois and Missouri pride themselves on their hard work and the strength of their word. This means that most of these businesses enter into agreements with the full intent of keeping their promises. But, as you’re probably well aware, things don’t always go as planned in the business world. Obligations are neglected, promises are broken, and contracts are breached.
But not all contractual issues are based on a party’s failure to adhere to his or her obligations as laid out in the agreement. In some circumstances, the very basis of the contract itself is flawed. If you feel slighted by a contract that was bad from the get-go, then you may want to consider whether legal action is warranted.
Have you been subjected to fraudulent misrepresentation?
One circumstance that may warrant legal action is fraudulent misrepresentation. Here, a party essentially dupes you into a contract for its own benefit. This can leave you with unfulfilled expectations and lost profits. By taking legal action, though, you might be able to escape the contract and be put back in the position you were in prior to the contract. You might also be able to recover additional compensation for your losses.
But how, exactly, does fraudulent misrepresentation occur? To start, a party has to make an actual representation of fact that is wrong or misleading. In order to be actionable under the law, the party that made that representation must have either known that it was false or had a reckless disregard for its truthfulness. The party’s intent when making the false statement is to induce the other side to rely upon that representation and decide to enter into a contractual relationship. The other side then takes action on the representation by entering into the contract, and suffers some sort of harm by doing so.
An example of fraudulent misrepresentation
For example, a seller of parts may give assurances that those parts adhere to a certain standard of quality. As a result, a buyer signs a large contract to buy those parts to fix consumer goods. However, the buyer subsequently discovers that the seller lied about the quality of the parts, and the parts themselves turn out to be of low quality. This low quality affects the reputation of the buyer and forces the buyer to spend more money purchasing additional parts and remedying consumer complaints. These costs, financial and otherwise, could have been avoided if the contract had been based on truthful representations.
Proving fraudulent misrepresentation
Successfully litigating a fraudulent misrepresentation claim isn’t easy. After all, one aspect that you’ll have to prove is the other side’s intent when making the false representation. But there are concrete steps that you can take to gather evidence and build your claim.
To start, you should engage in thorough discovery, which means gathering pertinent documents from the other party and deposing witnesses who have knowledge of the transaction at hand. Keep all communications between you and the other party, too. Educate yourself about the statutory and case law in play so that you know how the facts of your case stack up.
These steps should give you a clearer picture of the falsity of the representation that is in question, the other party’s intent when making that representation, and how the representation could have been avoided.
Don’t let your business fall victim to fraud
You’ve worked hard to build your business and get it to where it is now. Despite that work, we understand the vulnerability of your business and how most small businesses are just one or two bad deals away from being in a dire financial predicament. That’s why it’s imperative that you’re aggressive when it comes to protecting your business interests.
With that in mind, if you feel like you’ve been wronged in a contractual relationship, then now may be the time for you to sit down with an experienced legal professional to discuss your next steps.