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In Florida, the law provides certain protections when someone makes a fraudulent statement that causes you to enter into a contract. Fraud in the Inducement happens when someone purposely tells you a lie that causes you to agree to and sign a contract. When this happens, it obviously would not be fair to force you to stick to the contract. If this has happened to you, you may have a cause of action for Fraud in the Inducement.
As individuals entering into contracts, it is necessary to rely in great part on what others tell us. We should not have to conduct an independent investigation of every statement or claim someone tells us before entering into a contract. That would be overly burdensome, and the law agrees.
To bring a claim for Fraud in the Inducement (aka Fraudulent Inducement) in Florida,
a Plaintiff must show that:
Fraudulent inducement is a separate and distinct claim from breach of contract, because to have a breach of contract, there must first be an actual contract.
Under a claim for fraudulent inducement the plaintiff alleges that the defendant made a pre-contract false representation that caused the plaintiff to enter the contract. In this situation, the contract is a fraud such that no claims may be made under it. When a contract was entered into based on fraud, it is void such that there is no actual contract. That is why cancellation (or rescission) is the main remedy for a claim of Fraud in the Inducement.
Fraud in the Inducement occurs when one party intentionally makes a false statement to induce another party into entering a contract. The deceived party relies on this false information to make a decision, which leads to an unfair contractual obligation.
While breach of contract involves the failure to fulfill the terms of an existing contract, Fraud in the Inducement questions the validity of the contract itself. It claims that the contract was entered into based on deceptive information, making it void or voidable.
To successfully bring a claim, the plaintiff must prove that the defendant made a false statement of material fact, knew or should have known it was false, intended for the plaintiff to rely on it, and that the plaintiff suffered injury as a result of justifiable reliance on the false statement.
The primary remedy is cancellation or rescission of the contract. In some cases, monetary damages may also be awarded to compensate for losses incurred due to the fraudulent act.
Generally, the law expects parties to read and understand contracts before signing them. However, if you were induced into signing the contract based on fraudulent statements, you may still have a valid claim.
Intent is crucial in establishing a claim. The defendant must have intended to deceive the plaintiff into entering the contract. Mere negligence or misunderstanding is usually not sufficient for a successful claim.
Proving intent can be challenging and often relies on circumstantial evidence such as emails, text messages, or verbal communications where the false statement was made. Expert testimony may also be used.
In Florida, the statute of limitations for bringing a Fraud in the Inducement claim is four years from the date the fraud was discovered or should have been discovered.
It is possible, though rare, for both parties to be guilty. In such cases, the court will examine the extent and impact of the fraudulent actions on both sides.
If you suspect you’ve been a victim, consult with a legal expert specializing in contract law and fraud claims. Gather all relevant documents and communications to build a strong case.
