Fraud vs Breach of Contract

A task for Orlando breach of contract lawyers is to distinguish between a claim for breach of contract and claims for fraud or misrepresentation arising out of the negotiation of a contract.  First, it’s important to distinguish the timing of the fraud or misrepresentation.  If one party tells the other party false facts or intentionally conceals important facts in order to convince the other party to sign the contract, then you have a potential claim for fraudulent inducement.  If the same false fact or intentional concealment takes place after signing the contract and during the performance of the contract, then the remedy is likely limited to a breach of contract action for money damages.

 

Fraud and Misrepresentation in Breach of Contract Claims

Fraud in the inducement, fraudulent inducement, or misrepresentation and omission of material information during contract negotiations, is when the decision maker was given false or misleading information on which to rely before signing the contract.  A party prevailing on an action for fraud in the inducement can typically have the court order the remedy of rescission, in which the contract is essentially torn up and the parties are returned to the position they would have been in if the agreement had never been made.  Rescission is an equitable remedy for breach of contract.  Alternatively, the injured party can affirm the transaction and seek breach of contract money damages.

A fraud in the inducement claim can be tricky to prove because:

  1. The fraudulent statements or omissions must be of “fact” and NOT “opinion” (facts can be proven through evidence; opinions are based on personal judgments/beliefs)
  2. The injured party must have justifiably relied on the false information (meaning one cannot justifiably rely on an obvious misrepresentation)
  3. The injured party must be able to prove up the false information provided  (fraudulent parties rarely admit their fraud)

If you have any questions about a fraud in the inducement claim for our Orlando breach of contract lawyers then call the Spence Law Firm today for a FREE consultation!