V. Torts: Misrepresentation/Business Relations
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PRIMA FACIE CASE
1. misrepresentation by defendant;
2. scienter (knew falsity or reckless disregard for falsity);
3. an intent to induce plaintiff's reliance on the misrepresentation;
4. causation (ie, actual reliance);
5. justifiable reliance by plaintiff; and
- usually must be a false representation of fact, but misrepresentation of opinion may be actionable if there's justifiable reliance
- simple failure to disclose does not usually satisfy the "act" element unless:
-- defendant stands in such a ficuciary relationship to plaintiff as would call for a duty of disclosure
-- defendant selling real property knows that plaintiff is unaware of and cannot reasonably discover material info about a transaction
-- where defendant speaks and her utterance deceives plaintiff
or if there has been active concealment
, she will be under a duty to inform plaintiff of the true facts
- plaintiff must prove the defendant made the representation knowing it to be false, or that it was made with reckless disregard as to its truth or falsity
- If scienter is not present, defendant may still be liable for negligent misrepresentation.
Defendant must have intended to induce plaintiff or a class of persons to which plaintiff belongs to act or refrain from acting in reliance on the misrepresentation
- Where defendant communicates to one person and another relies, defendant is viewed as intending to deceive the person who relies upon the misrepresentation if the defendant could reasonably foresee that the plaintiff will have such reliance.
- Continuous deception exception: where the misrepresentation is continous (ie, false claims on label), it is not necessary that the reliance of a particular plaintiff be intended.
MISREPRESENTTION: JUSTIFIABLE RELIANCE
Reliance on representations of fact is almost always justified. Only where facts are obviously false is such reliance not.
Plaintiff has no duty to investigate representations, but if he does and finds them to be false, reliance is no longer justifiable.
Reliance on opinion is usually not justifiable unless:
-- defendant has superior knowledge of subject matter;
-- statements of law made by a lawyer to a lay person, or statements of law that includes a misrepresentation of fact by anyone
-- present intent statements pertaining to future events
plaintiff may recover only if he has suffered actual pecuniary loss as a result of the reliance
Most courts use a contract measure of damages -- the value of the property as represented less the value of the property as it actually is.
PRIMA FACIE CASE
1. misrepresentation in business or professional capacity
2. breach of duty toward particular plaintiff;
4. justifiable reliance; and
NEGLIGENT MISREPRESENTATION vs. INTENTIONAL MISREPRESENTATION
applies only where there is a business or professional context and
is limited to those cases where misrepresentation was made directly to plaintiff or the plaintiff is a specific person that defendant knew would rely
INTERFERENCE WITH BUSINESS RELATIONS:
PRIMA FACIE CASE
1. existence of a valid contractual relationship between plaintiff and a third party or a valid business expectancy of plaintiff;
2. defendant's knowledge of the relationship or expectancy;
3. intentional interference by defendant that induces a breach or termination of the relationship or expectancy; and
4. damage to plaintiff.
INTERFERENCE WITH BUSINESS RELATIONSHIP:
Plaintiff must prove actual damage from the interference, but may also recover mental distress damages and punitive damages in appropriate cases.
INTERFERENCE WITH BUSINESS RELATIONSHIP: PRIVILEGE
Interferor's conduct may be privileged where it is a proper attempt to obtain business for the interferor or protect its interests. Factors:
-- type of business relationship involved: more likely to be privileged if no contract exists and relationship is prospective
-- means of persuasion: interference using legitimate and commercially accceptable means of persuasion is more likely to be privileged than if using illegal or threatening tactics
-- defendant is a competitor: more likely to be privileged
-- defendant's relationship with third party: more likely to be privileged if defendant has responsibility for or has a financial interest in third party, or if the third party has sought business advice from plaintiff
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