What Is Business Misrepresentation?

If you own your own company, you understand the importance of contracts. These are enforced by contract law, which ensures that both parties uphold their end of an agreement. Most of the time, this is upheld since both parties are aware of the law. However, sometimes, one side will not uphold their end of the agreement, leading to business misrepresentation lawsuits.

What It Is

Fraudulent misrepresentation is the primary type and occurs when one party in the contact knowingly makes false statements that affect the outcome of the agreement. This is because a contract is only valid if both sides agree to all the terms. When any of these terms are not accurate or purposefully misrepresented, the result is an invalid contract and a lawsuit.

Proving It in a Court

To prove a misrepresentation case, there must be specific information available. This includes details about the representation, proof it was false, exact dates, how it was relied on, proof it was relied on, and resulting damages.

Potential Legal Outcomes

Many cases end with the contract being reversed. This is because any fraudulent contract is voidable. However, if this is not possible, the party being sued may be required to pay the damages of their contract. In this case, businesses need proper insurance to ensure survival.

Misrepresentation issues can have major implications for a business. This is especially true if someone has the necessary information to prove their claim in court. In these cases, having the proper insurance is the key to saving your business.