Business Misrepresentation Cause of Action

Business misrepresentation involves a false statement made in the context of a contract or business transaction.

What Is Business Misrepresentation?

Misrepresentation refers to a false statement made by one party to another party intending to induce the latter party to enter into a contract or take other action. Misrepresentation can be innocent. For example, when the person making the statement did not know it was false or fraudulent.

How Is Business Misrepresentation Proven?

Proving business misrepresentation typically involves demonstrating that the following elements:

A False Statement:

The first step in proving misrepresentation is to show that a false statement was made. This statement must be material, meaning it is significant and would affect a reasonable person’s decision to enter into a contract.

Intent to Deceive:

It also must be shown that the person making the false statement did so with the intent to deceive the other party. This can be demonstrated through circumstantial evidence, such as the circumstances surrounding the making of the statement and the relationship between the parties.

Justifiable Reliance:

The party alleging misrepresentation must show that they relied on the false statement and that this reliance was reasonable. This means that a reasonable person in the same circumstances would have relied on the false statement.


The party alleging misrepresentation must also show that they suffered damages as a result of their reliance on the false statement.

It’s important to note that in some jurisdictions, the plaintiff may also have to prove that the defendant had a duty to disclose the true facts and that the defendant’s failure to do so constituted a breach of that duty.

Proving misrepresentation can be complex and often requires expert witnesses, documentary evidence, and other forms of proof. Working with an experienced attorney who can help you build a strong case and navigate the legal process is important.

What Are Remedies For Business Misrepresentation?

The remedies for business misrepresentation can vary depending on the specific circumstances of the case and the legal jurisdiction in which the misrepresentation occurred. Common remedies for business misrepresentation include:

Monetary Damages:

The most common remedy for business misrepresentation is monetary damages, which are designed to compensate the victim for the financial losses they suffered as a result of the misrepresentation. This can include compensation for lost profits, out-of-pocket expenses, and other damages.


Rescission is a remedy that allows the victim of the misrepresentation to void the contract and be restored to the position they were in before entering into the contract. This remedy is typically available when the misrepresentation was material and induced the victim to enter into the contract.


Restitution is a remedy requiring the person making the misrepresentation to return any money or property they obtained due to the misrepresentation.


An injunction is a court order that requires the person making the misrepresentation to stop their illegal activities. This can be an effective remedy in cases where the misrepresentation is ongoing or likely to continue.

The specific remedies available in a particular case will depend on the facts and circumstances of the misrepresentation and the legal jurisdiction in which the misrepresentation took place. An experienced attorney can help you understand your options and pursue the remedies that are most appropriate for your situation.

Contact Chatow Law For A Free Consultation

We are a business partnership dispute law firm serving clients in Los Angeles County, Orange County, San Diego County, and Palm Springs. Call us at 949-478-8393 for a FREE consultation if you believe you’ve been subject to misrepresentation in a business transaction. We can help you assess your legal rights and advise you on your best course of action.