Fraudulent misrepresentation - Next Generation Bar Exam
- A seller tells a buyer the roof is new, honestly but carelessly, without checking records showing it is 20 years old. What claim fits these facts?
- Negligent misrepresentation, not fraud. The seller lacked knowledge of falsity or reckless disregard.
- A seller, asked whether a basement floods, says 'never,' knowing it floods every spring. The buyer relies and buys. What tort did the seller commit?
- Fraudulent misrepresentation. The seller knowingly misrepresented a material fact to induce reliance.
- What does scienter require in a fraudulent misrepresentation claim?
- Knowledge that the statement was false or reckless disregard of its truth. An honest but careless belief supports at most negligent misrepresentation.
- What is the status of a statement of opinion in a fraud claim?
- It is generally not actionable, unless it implies facts or comes from a person with superior knowledge. Puffery, such as 'the best car in town,' is not actionable.
- What damages are typically recoverable for fraudulent misrepresentation?
- Out-of-pocket loss or benefit-of-the-bargain damages, as the jurisdiction permits. Punitive damages may be available for intentional fraud.
- What is the general rule on liability for nondisclosure in fraudulent misrepresentation?
- There is generally no liability for silence absent a duty to disclose. A duty may arise from a fiduciary relationship, half-truths, or active concealment.
- A seller tells a buyer that a house is 'a great value.' The buyer later concludes it was overpriced. What is the status of the statement?
- It is nonactionable puffery. General statements of value are opinion.
- What reliance must a fraud plaintiff show?
- Justifiable reliance. A plaintiff need not investigate unless the falsity is obvious.
- What is the status of active concealment of a material fact?
- It is treated as a misrepresentation. Painting over water damage to hide it is a classic example.
- What are the elements of fraudulent misrepresentation?
- A misrepresentation of material fact, scienter, intent to induce reliance, justifiable reliance, and damages. Scienter means knowledge of falsity or reckless disregard of truth.
- What is the status of a promise made with no intention of performing it?
- It is an actionable misrepresentation of the promisor's present intent. A broken promise alone is a contract matter, not fraud.
- What standard of proof applies to fraud in many jurisdictions?
- Clear and convincing evidence. The heightened standard reflects the seriousness of the charge.