The amount of due diligence you can do when entering into a contract with another party often has its limits. As a result, you often rely on the representations and warranties from another party when signing an agreement. You may have a claim for fraud in the inducement in Florida when misrepresentations occur in this context.
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What is fraud in the inducement under Florida law? Our fraud in the inducement definition
Fraud in the inducement in Florida is cause of action that occurs when one party causes harm to another by making false statements with the intent of inducing that party to take certain action. Fraud in the inducement can also be a crime that leads to prosecution.
Fraudulent inducement vs fraudulent misrepresentation
While these terms seem interchangeable, a subtle difference exists between fraudulent inducement and fraudulent misrepresentation. A fraudulent misrepresentation is when someone purposefully makes a misstatement of material fact. In comparison, fraudulent inducement involves additional elements beyond the existence of a fraudulent misrepresentation, as explained more fully below.
Fraud in inducement vs fraud in execution
Fraud in inducement is also often confused with fraud in the execution under Florida contract law. With fraud in the inducement, the false statement causes another to take an action. Fraud in execution, on the other hand, is when a party misrepresents the terms or subject of a written contract.
What is the legal effect of fraud in the inducement?
The main legal effect of fraud in the inducement is the possible civil and criminal cause of action that may follow, which can include payments of fines and damages. Other effects of fraud in the inducement may include voiding the underlying agreement (i.e., cancellation or rescission of the contract).
Fraudulent inducement elements in Florida
Pursuing a successful claim in trial court requires showing the existence of all the fraud in the inducement elements.
The first element is that the defendant must have made a false statement, warranty, or omission about a material fact. A material fact is significant or essential to the transaction. The false statement can be an oral representation or could be a false representation in a written contract. Second, the person making the statement either knew or should have known that the statement was false. Third, the fraud must induce another party to act. This could be agreeing to a contract, a breach of contract, or some other type of performance. Finally, the party induced to act by the falsity must have suffered some harm because of their reliance on the misrepresentation.
Fraud in the inducement example
Here is a fraud in the inducement example: Party A contemplates the purchase of a car and asks Party B if it has problems. B knew the car needs a new transmission but was silent. A purchased the car as a result and unexpectedly paid for a new transmission afterward.
Party A may have a claim of fraudulent inducement against Party B for its misrepresentation of the car's condition.
Damages for fraud in the inducement under Florida law
A plaintiff's justifiable reliance from a claim of fraud may create liability to a defendant for several types of damages:
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compensatory damages to cover the economic harm to the plaintiff
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injunctive relief (e.g., voiding performance under a contract, stopping the fraudulent activity)
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court-ordered punitive damages to deter future fraudulent inducement from the defendant
Fraud in the inducement affirmative defense in Florida
An accused party should understand potentially available fraud in the inducement affirmative defense in Florida that may negate liability. Most defenses will involve showing the absence of one or more of the elements necessary to prove fraudulent inducement. For example, truth of a statement could disprove the falsity requirement. A successful defendant could also show the plaintiff's reliance on the fraudulent statement was not justifiable.
On a related note, fraud in the inducement may also be an affirmative defense to a breach of contract claim in addition to showing the nonexistence of one of the elements of a contract.
Florida statute of limitations for fraud in the inducement
The Florida statute of limitations for fraud in the inducement is four years, as a general rule. A plaintiff must typically bring a claim within 4 years from the date of the misrepresentation, or in some cases, the date a claim became apparent.
Fraud in the inducement remedies
Fraud in the inducement remedies can include monetary relief to reimburse any financial losses or expenses incurred because of the fraud. A plaintiff may also obtain other preventative remedies from a court (e.g., contract rescission).
Florida jury instructions for fraud in the inducement
Florida jury instructions for fraud in the inducement mention the requirement that the defendant must have known that the statement was false or was made without knowledge about its truth.
Need help with fraud by inducement in Florida?
Cueto Law Group helps its clients in both the pursuant of an actionable fraud in the inducement case as well as defending parties wrongly accused. Intentional and negligent misrepresentations can have severe business consequences. The attorneys at our law firm understand these impacts and work towards justice through the trial and appellate courts throughout Miami and greater Florida.
Contact Cueto Law Group today about a fraud by inducement claim.
Final points on fraudulent inducement under Florida law
Fraudulent inducement in Florida can be a tough common law claim to pursue. Concerned parties should seek appropriate legal advice from their attorneys about the viability of the claim or potential defenses.
FAQs on fraud inducement
Below are some answers to common questions about fraud in the inducement claims.
How do I prove fraud in Florida?
Proving fraud in Florida requires evidence that the defendant actually made a misrepresentation or omission, which can be difficult if the only proof is a person's testimony. Furthermore, showing actionable fraud requires the submission of evidence that suggests the defendant intended to defraud the plaintiff.
Is fraud in the inducement void?
Fraud in the inducement is an affirmative defense that a party may use to void a contract or justify a breach of contract. The fraud prevents any true meeting of the minds necessary to have a valid contract and may create a situation of unjust enrichment to one party.
Is fraud in the inducement a real defense?
Yes, fraud in the inducement is a real defense to a breach of contract claim. However, such claims and defenses are often fact-specific, which creates risk about the success or failure of a claim. You should seek a consultation from an attorney at your law firm for more information.
