Misrepresentation is a type of tort that a defendant can be charged with in a civil action. It typically occurs when a person makes a false statement of material fact for the purpose of persuading another person to enter into a contract or other arrangement. For example, if a real estate agent tells a potential buyer that a house has new plumbing, when the plumbing is in fact 30 years old, the agent could be liable for misrepresentation. Misrepresentation commonly happens in cases involving false advertising, insurance claims, and real estate contract suits. When misrepresentation occurs in a contract case, the contract is generally voided, and the injured party may be awarded monetary or equitable damages.
In general, a plaintiff must prove five elements in order to be successful in a misrepresentation suit. First, the plaintiff must show that the defendant made a false statement of material fact. Statements that are merely expressing an opinion usually are not considered false statements of fact. There are some exceptions to this rule, however. For instance, an opinion given by an expert to a non-expert or by a fiduciary may be considered a false representation of fact.
Next, the plaintiff must show that the misrepresentation was intentional or negligent. An intentional, or fraudulent, misrepresentation occurs when a defendant knows that he or she is making a false statement of material fact. A negligent misstatement takes place when a defendant fails to use reasonable care when making a statement. In other words, the defendant is negligent if he should have known that his statement was untrue.
The third element that must be demonstrated is that the defendant intended for the plaintiff to rely on the false statement. For instance, suppose that an insurance company tells a potential customer something untrue in order to get the customer to take out an insurance policy. Intent would be present in this situation because the insurance company made the representation in order to sell the policy.
For the fourth element, the plaintiff ordinarily needs to prove that he or she justifiably relied on the defendant’s statement. The factual circumstances surrounding the case as well as the plaintiff’s personal qualities and characteristics may both be taken into consideration when determining justifiable reliance. A mentally incompetent plaintiff would likely have a lower threshold than a savvier plaintiff. Finally, the plaintiff must show that he or she was injured as a result of the misrepresentation.