Podcast Companion — Episode 20: Fraudulent Misrepresentation

Pairs with InglésLegal Podcast, EP20

Not every incorrect statement amounts to fraud. Episode 20 covers Fraudulent Misrepresentation — the doctrine that punishes intentional lies used to induce someone into a contract.

The Concept

Under common law, fraudulent misrepresentation requires a false statement of material fact, knowledge of its falsity or reckless disregard for the truth, intent to induce the other party to contract, reasonable reliance by the other party, and resulting damages. Opinions, projections, or ordinary commercial “puffery” generally aren’t fraud — unless they conceal material facts the other side needed to know.

Applied Example

A seller states that an asset has “no regulatory issues,” while knowing an investigation is already pending. The buyer relies on that statement, closes the deal, and later faces penalties. The contract may be rescinded, and the seller can be held liable for fraudulent misrepresentation — even if an entire agreement clause was in place, since integration clauses don’t shield intentional fraud.

Key Expressions from This Episode

False statement
Meaning: an assertion of fact that is untrue at the time it’s made.
Spanish equivalent: declaración falsa

Intent
Meaning: the deliberate purpose to deceive or induce reliance through a false statement.
Spanish equivalent: intención / dolo

Reliance
Meaning: the injured party’s reasonable dependence on the false statement when deciding to contract.
Spanish equivalent: confianza / dependencia razonable

Professional Tip

Avoid absolute statements during negotiations (“there is no risk whatsoever”), use complete and accurate disclosure schedules, and align pre-signing statements with the formal representations and warranties in the contract. Document your due diligence and any risk disclosures — what’s said before signing can end up costing more than what’s actually written into the contract.

Why It Matters

Fraudulent misrepresentation protects the integrity of contractual consent itself. Understanding its elements is essential for negotiating transparently and avoiding exposure that no amount of careful contract drafting can fix after the fact.

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For the full discussion, including a fraud carve-out clause, listen to Episode 20 — Fraudulent Misrepresentation — on the InglésLegal podcast.