Written by attorney Keith David Parsons

Have You Been Defrauded? 5 Criteria to Know

Legal fraud is not just any lie or deception. In order to recover money for another businessperson’s deceit, you must satisfy five criteria. Read on to see whether you have a claim for fraud.

1. You Need a Misrepresentation

The misrepresentation is any lie, trick, or deceit. When you realize that something another business person said was not true you begin to think you may have been defrauded. Legally to be a fraudulent misrepresentation what was told you by the other person has to be untrue or deceptive. If what the other person or company told you was actually true you might not be able to recover.

2. The Misrepresentation must be Material

The lie has to pertain to something that is relevant to your business, the deal between you and the other party, or your potential case. If another party lies to you about a trivial or irrelevant thing during a course of dealing then you might not have a claim for fraud. For example, if they promise to deliver 4,000 gallons of solvent to your business but instead only deliver 3,999.5 gallons of solvent then their promise is unlikely to constitute fraud, even if all the other requirements are met (it might still be a breach of contract, but that is a different topic).

3. They Must Intend to Lie

You will need to prove that the other person meant to deceive you when they made the misrepresentation. If the other person just makes a mistake then you have not been defrauded. You might still have a case for “constructive fraud" however. For constructive fraud you must prove that the other party was negligent in making the misrepresentation to you. An attorney can help you tell whether your case is one for fraud or constructive fraud.

4. You Must Reasonably Believe and Rely on Their Lie

You cannot recover for fraud, even if a person lies to your face, if you did not believe them. Furthermore, you cannot recover if you ought to have known they were not being truthful. If a person sells you a parakeet in an open cage while promising you that it is, in fact, a puppy, you have not been defrauded because you ought to have known their statement was false.

5. You Must Suffer Damages as a Result of the Lie

Even if a person purposefully lies to you about a material fact, and you reasonably believe them, unless you suffer some sort of loss as a result, you do not have a case. If your business deal does not go through for reasons unrelated to the potential fraud then you are lucky, because you avoided losing money! On the other hand, you will not have a good fraud case since suffering damages is an element of any civil action.

As a practical matter also, you need to have not only some damages, but enough damages to make it worth your while to hire an attorney. Fraud is a difficult cause of action to prove and may take significant attorney time, but if you have enough evidence of purposeful deception you can get punitive damages, which may allow you an even greater recovery. If you think you satisfy all five of the above requirements talk to me or another attorney who is familiar with fraud today to enforce your rights. I have reasonable consultation fees and terms of representation.

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