Fraudulent Inducement

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Fraudulent inducement is a tort claim that arises when a person or entity is deceived into entering into a contract by a material misrepresentation of fact. To succeed in a claim of fraudulent inducement, the plaintiff must prove several elements.
The investor sued the financial advisor for fraudulent inducement after discovering the advisor had misrepresented the risks of the investment.
In In re Enron Corp. Securities Litigation (2006), investors successfully sued the company for fraudulent inducement based on misrepresentations about the company's financial health.
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Frequently Asked Questions

To win a fraudulent inducement claim, the plaintiff must typically prove: 1. A false statement of material fact: The misrepresentation must be about a fact that is important to the decision to enter the contract. 2. Knowledge or reckless disregard of the falsity of the statement by the defendant: The defendant must have known the statement was false or acted with reckless disregard for its truth. 3. Intent to deceive the plaintiff: The defendant must have intended to mislead the plaintiff into entering the contract. 4. Justifiable reliance by the plaintiff on the misrepresentation: The plaintiff must have reasonably relied on the misrepresentation in deciding to enter the contract. 5. Damages suffered by the plaintiff: The plaintiff must have suffered some harm as a result of entering the contract.

Yes, if a plaintiff can prove all the elements of fraudulent inducement, they may be able to have the contract declared void, as if it never existed. This can allow the plaintiff to recover any money they paid or lost as a result of the contract.

A defendant in a fraudulent inducement claim may argue that the plaintiff did not rely on the misrepresentation, that they discovered the misrepresentation before entering the contract, or that they were not harmed by the misrepresentation.

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