What Is Contract Fraud?

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What Is Contract Fraud?

Most business owners enter contracts in good faith and realize sound transactions are the basis of building a successful business. However, sometimes you run into contract fraud in business dealings,  or even worse stand accused of it. For your own legal protection, it is useful to understand what actions constitute contract fraud.

Contract fraud involves more than misrepresentation, but understanding the legal definition of misrepresentation is a good place to start. Misrepresentation is an untrue assertion of fact or engaging in conduct that is equivalent to an untrue assertion of fact. By fact, the legal system does not mean opinion or an assurance or conjecture about a future event. Misrepresentation can also involve concealing or not disclosing important facts. Sometimes people innocently make untrue assertions while believing they are true or they fail to disclose a fact, not realizing its importance. For fraud to occur, as cited in the case Myers & Chapman, Inc. v. Thomas G. Evans, Inc., reviewed by the Supreme Court of North Carolina, misrepresentation must be done with an intent to deceive.

The legal reason for prosecuting contract fraud is to prevent businesses from profiting based on intentionally deceitful practices, whether transactions are buy-sell agreements, employment contracts, government contracts or any type of transactional agreement. You have the legal right to recover damages resulting from contract fraud, but your lawyer must prove the misrepresentation was done with the intent to deceive. When the other party knows their statements are false or is doubtful about the statement being true or there was no basis for making a statement, attorneys devise strategies to show the court that misrepresentation was intentional. When you relied on the false statement in your decision to accept the contract, this factor has bearing in the case as well.

The North Carolina Unfair and Deceptive Trade Practices Act and the Federal Trade Commission Act provide guidelines that courts use when ruling on contract fraud.

Whether you have suffered damages, or stand accused of causing damages, because of contract fraud, an experienced business lawyer at John F. Hanzel, P.A. can protect your rights in a civil case.