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What Is Fraud in the Inducement?

A person who makes material false statements of fact with the intent of causing others to rely on them to their detriment could be charged and convicted of committing fraud in the inducement, or fraudulent inducement. Usually, this offense occurs in situations that involve signing a contract, so if you live in south Florida and are being investigated for committing fraudulent inducement during a business transaction, it is critical to contact an experienced white collar crime attorney who can advise you on your next steps.

Elements of Fraudulent Inducement

A person has committed fraud in the inducement if:

  • He or she made a false statement about a material fact;
  • He or she knew or should have known that the representation was false;
  • He or she made the statement in order to induce another to act; and
  • The other person’s reliance on the statement caused him or her an injury.

According to the Florida Jury Instructions, a material fact is one that is of such importance that a person would not have entered into a contract but for the statement. Additionally, in order to qualify, the false statement must relate to an existing fact, which means that predictions about future events do not constitute false representations. Furthermore, the defendant must have known that the statement was false at the time it was given. However, in order to bring a claim of fraudulent inducement, a plaintiff must file within four years of the date of the contract.

When a plaintiff alleges fraudulent inducement, he or she is essentially claiming that the defendant made a false representation that caused the plaintiff to later enter into a contract. If a court determines that a contract was based on fraud, the agreement will be considered void as no actual contract was ever formed. For this reason, one of the most common remedies in a fraudulent inducement case is to cancel or rescind the contract between the plaintiff and the defendant.

Possible Defenses

If a plaintiff is able to establish the necessary elements, the defendant could be required to pay a number of damages, including:

  • Punitive damages;
  • Lost profits; and
  • Future loss of profits.

Fortunately, fraud in the inducement can be difficult to prove, especially if a defendant has a strong defense, which could include some or all of the following arguments:

  • It was unreasonable for the plaintiff to rely on the statement;
  • The defendant did not know that the statement was false;
  • The statement was not false; and
  • The defendant did not intend to induce the other party to enter a contract or complete a transaction.

Contact Jeffrey S. Weiner, P.A. Today to Speak With an Experienced White Collar Crime Lawyer

Being convicted of fraud in the inducement can have devastating consequences for a person’s finances, reputation, and employment prospects, so if you have been charged with fraudulent inducement, please contact Jeffrey S. Weiner, P.A., Criminal Defense Attorneys at (305) 670-9919 to schedule a free consultation with a dedicated Florida white collar crime attorney.

Resources:

scholar.google.com/scholar_case?case=4518284118892180224&q=+Mettler,+Inc.+v.+Ellen+Tracy,+Inc.,+648+So.2d+253+(Fla.+2d+DCA+1994)&hl=en&as_sdt=2006

gpo.gov/fdsys/pkg/USCOURTS-flsd-1_13-cv-21718/pdf/USCOURTS-flsd-1_13-cv-21718-0.pdf

leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0000-0099/0095/Sections/0095.11.html

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