Proving Fraudulent Representations that Damaged Your Business

magnifying-glassIn most circumstances, the best way to protect your business from fraud is to clearly include in the contract all promises and representations for which each party is to be responsible, to verify the truth of the representations made, and to thoroughly research the party with whom you want to do business. If a promise is breached or a representation proves false, then the party to the contract that reasonably relied on the promise or representation can typically file a lawsuit and assert a breach of contract claim against the party that did not fulfill its end of the bargain.

Your business might also wish to sue for fraud. Even if the promise or representation is written in the contract, a cause of action for fraud in Georgia allows the defrauded party to request an award of punitive or deterrence damages in excess of the amount of actual damages caused by the fraud. The general purpose of punitive or deterrence damages is to make it unprofitable to commit fraud in the future. If your business relied on a promise or representation that does not appear in the written contract, and a merger clause and the parol evidence rule do not create a problem, then your business may need to sue for fraud to recover damages caused by an intentionally false representation. Fraud is typically more difficult to prove than breach of contract.

To prove fraud, the party asserting the claim must prove that the other party made a false representation, among other things. However, courts limit what types of representations can give rise to a claim for fraud. The following are a few examples of such limitations.

  • A false expression of opinion, as opposed to a false statement of fact, will not ordinarily give rise to a claim for fraud.
  • A promise as to future events does not give rise to a claim for fraud, unless the person who made the promise intended not to perform the promise and knew that the future event would not occur at the time he or she made the promise.
  • A claim for fraud cannot be based on a misrepresentation of the law or the effect of a law. The reason for this rule is the general maxim that “ignorance of the law is no excuse.” Every person is deemed to know the law and understand its effect, no matter how complicated, ambiguous, or uncertain it may be.
  • If the person who relies on the representation can verify the untruthfulness of the representation by reading public records or documents that are available to him or her, then courts will typically not allow that person to recover for fraud.

Experienced Fraud Litigation Attorneys

If you or your company has been defrauded by another individual or business, you may be entitled to monetary damages. However, fraud litigation is usually complex and requires the best legal strategy and representation to produce a positive result. The legal team of Schklar & Heim, LLC has a proven track record of winning in high-stakes business fraud cases. Please email us or contact our office today at (404) 888-0100 to discuss your matter. All information is kept strictly confidential, even if you choose not to hire our law firm.