Legal Definitions - Misrepresentation

In legal terms, Misrepresentation refers to a false or misleading statement of fact, or a significant omission of information, made with the intent to deceive another party. This deception typically leads the other party to act in a way they would not have if they had known the truth. Misrepresentation is a fundamental element in many types of fraud claims.

It's important to distinguish between a statement of fact and a statement of pure opinion. Generally, a statement of pure opinion is not considered a misrepresentation. However, an opinion can become a misrepresentation if the person stating it does not genuinely hold that opinion, or if the opinion is based on underlying factual assertions that are themselves false. Similarly, if there is a relationship of trust or reliance between the parties, an objectively false statement of opinion could be considered a misrepresentation.

Misrepresentation can occur in several ways:

• False Statement of Fact: Directly stating something untrue.
• Material Omission: Failing to disclose crucial information that makes other statements misleading or creates a false impression.

Examples of Misrepresentation:

• Imagine a car dealership selling a used vehicle. The salesperson tells a potential buyer, "This car has never been in an accident, and the odometer reading of 50,000 miles is accurate." However, the salesperson knows from the car's service history that it was involved in a major collision last year and that the odometer was illegally rolled back by 30,000 miles.

  This is a clear case of misrepresentation because the salesperson made a false statement of fact (about the accident history and odometer reading) with the intent to deceive the buyer into purchasing the car.

• Consider a small business owner seeking a loan from a bank. In their loan application, they include financial statements that show the company's revenue for the past year was $1 million. In reality, the owner intentionally inflated the sales figures, and the actual revenue was only $500,000.

  Here, the business owner engaged in misrepresentation by presenting false financial information to the bank. This false statement of fact was intended to mislead the bank into approving a loan it might not have otherwise granted.

• A homeowner is selling their property and knows that the basement has a recurring issue with severe water leakage during heavy rains, which has caused significant mold growth. When a prospective buyer asks about the condition of the basement, the homeowner simply states, "It's dry," without mentioning the leakage or mold.

  This is an example of misrepresentation through material omission. While the homeowner didn't make a direct lie about the basement being "dry" at that exact moment, they intentionally failed to disclose critical information (the recurring leakage and mold) that would have significantly influenced the buyer's decision, thereby creating a misleading impression of the property's condition.