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Fraud in the inducement

Waltham, MA |

In Massachusetts, is fraud in the inducement barred from the economic doctrine loss(rule)?

The damages are for breach of contract, not product liability. The loss is not to property, purely economic. Thank you.

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Attorney answers 1


Although in Massachusetts purely economic losses are generally unrecoverable in tort, FMR Corp. v. Boston Edison Co., 415 Mass. 393, 613 N.E.2d 902, 903 (Mass. 1994), courts have carved out an exception for claims of negligent misrepresentation. Danca v. Taunton Sav. Bank, 385 Mass. 1, 429 N.E.2d 1129, 1134 (Mass. 1982). This exception has sometimes been characterized as limited to claims of negligent misrepresentation in the provision of services, Gavett v. Roto-Rooter Servs. Co., 2001 U.S. Dist. LEXIS 20436 (D. Mass. Nov. 27, 2001), but the Massachusetts Appeals court seems to have extended the exception to all negligent misrepresentation claims. Nota Constr. Corp. v. Keyes Assocs., 45 Mass. App. Ct. 15, 694 N.E.2d 401, 405 (Mass. App. Ct. 1998). Intentional false statements inducing reliance should be viewed at least as seriously as negligent misrepresentations.

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