Business Fraud and Misrepresentation
Dishonesty and hiding information is all too common in today’s business dealings. We have substantial experience representing business and individuals who have been the victims of business fraud and misrepresentation. These false statements often arise in disputes over asset purchase agreements and business ownership disputes, IT and other vendor contracts and accounts, and between business owners and partners.
There are many types of fraud. One Texas court has broadly described fraud as “any cunning or artifice used to cheat or deceive another,” and is synonymous with “bad faith – overreaching and dishonesty.”
One type of fraud – fraudulent misrepresentation – is generally defined by the law as
- a knowing, material, and false misrepresentation
- made with the intention that it should be relied or acted on
- it was in fact relied on, and
- damages were suffered as a result
Even where a false representation is not explicitly stated, but important facts are withheld, or someone fails to tell you about significant facts that would have impacted your decision, Texas law may hold them liable. A “duty to speak” or
“duty to disclose” may be legally imposed in certain circumstances such as where:
- there is a confidential or formal fiduciary relationship between the parties
- a first representation was true, but the speaker comes into information that makes the original statement misleading
- a person voluntarily discloses partial information but fails to disclose the whole truth
- a person voluntarily discloses partial information that conveys a false impression
Formal fiduciaries that may be legally required to disclose information includes Trustees, Executors, Estate Administrators, attorneys, and others. A “confidential” or informal fiduciary relationship may exist based on the level of trust and confidence between the parties, the length of the relationship, and other factors.
Fraud is determined by statutory law in some instances. Fraud in a real estate or stock transaction in Texas is specifically defined by statute and may allow recovery of attorney’s fees and costs.
Related to fraud, Texas recognizes an independent cause of action for negligent misrepresentation that may apply in some cases – even where fraud won’t.
A fraud claim can be complicated, and fraud can take many forms. Consult with an experienced attorney to protect your rights.