fin 240 kaplowitz worksheet 15.2: fraudulent misrepresentation

Select the three situations where scienter may be found.

(1) knowingly making a misstatement of fact (2) making a statement recklessly without verifying its truth (3) implying a statement is based on personal knowledge when it is not

Select the three elements typically found in fraud.

(1) misrepresentation of material fact (2) intent to deceive (3) justifiable reliance on the misrepresentation

Fraudulent misrepresentation refers to misrepresentation which is _____ false and is _____ to mislead another. The person making the statements knows or _____ they are false.

consciously, intended, believes

Scienter is the science of determining if fraud exists.

false

When a party has been the victim of fraudulent misrepresentation, he may collect damages even if he has suffered no harm.

false

Innocent misrepresentation

giving wrong information about a material fact but with a reasonable belief that it is correct information

Fraudulent misrepresentation

giving wrong information about a material fact intentionally

Negligent misrepresentation

giving wrong information about a material fact with an unreasonable belief that it is correct information

Silence normally _____ misrepresentation. However, if there is _____ defect or a(n) _____ relationship, then a seller _____ have a duty to speak.

is not, a latent, fiduciary, may

An element of fraud is that the deceived party must have had a _____ reason for relying on the misrepresentation.

justifiable

Hiding a material fact from the other party to a contract is considered:

misrepresentation by action

There is one instance when an opinion may create fraudulent misrepresentation. Select the two criteria for this situation.

naïve purchaser, opinion of an expert

Statements of _____ or _____ about the future are generally not subject to fraud claims. Normally, this type of talk is called _____ and _____ legal.

opinion, productions, puffery, is

When a naïve purchaser relies on the opinion of an expert, the innocent party may be entitled to _____ (cancelation of the contract) or _____ (a change to the contract).

recission, reformation

When a party is fraudulently induced into a contract, that party can _____.

rescind the contract

Even though fraud is a tort, it is also a contract principle related to voluntary consent.

true

If there is an innocent misrepresentation, the innocent party may rescind the contract, but not sue for damages.

true

Negligent misrepresentation occurs when a party gives incorrect information about a material fact, believing it is true because of a lack of care in investigating the information.

true

People are assumed to know the law; therefore, if a nonexpert lies to someone about the law, it is not misrepresentation.

true

Misrepresentation can occur by:

words or actions