fraud in the inducement


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Related to fraud in the inducement: fraud in fact

fraud in the inducement

n. the use of deceit or trick to cause someone to act to his/her disadvantage, such as signing an agreement or deeding away real property. The heart of this type of fraud is misleading the other party as to the facts upon which he/she will base his/her decision to act. Example: "there will be tax advantages to you if you let me take title to your property," or "you don't have to read the rest of the contract--it is just routine legal language" but actually includes a balloon payment. (See: fraud, extrinsic fraud)

References in periodicals archive ?
1996)] seem to have been decided on a `bright line' basis--[HTP]: if a cause of action is pled as fraud in the inducement, the economic loss rule cannot apply; Woodson: if there is a contractual relationship between the parties, fraud in the inducement will never lie.
1993) (holding that "in a fraud in the inducement setting, the intentional fraud which occurs and is completed prior to the formation of the contract can be characterized as `independent' of the contract); Williams Elec.
In La Pesca, the court implied that an understanding of the "interwoven" limitation of Huron, "merely requires an appreciation of the distinction between fraud in the inducement and fraud in the performance of a contract.
1997), finding a fraud in the inducement claim barred because the alleged promises upon which that claim was premised were addressed in the series of detailed licensing agreements between the parties under which the plaintiffs' hotels were to become part of the Radisson Hotels family.
Weekly D1530 (4th DCA June 28, 2000), holding that the plaintiffs allegation that the defendant developer represented a certain parcel was a "natural preserve," when he knew there was a plan to build a school on that parcel, was sufficient to allege fraud in the inducement.
In all fraud in the inducement cases the alleged fraudulent misrepresentations will either concern the quality and characteristic of the underlying subject matter, because that is the definition of "fraud in the inducement" itself.
Returning to the Hotels of Key Largo language, and employing some of Judge Griffin's rationale, the district court reiterated that fraud in the inducement is precontract fraudulent conduct which undermines one party's ability to negotiate and make informed decisions, so that the factual inquiries supporting the fraud are distinguishable from those supporting a subsequent breach of contract claim.
a) Any promise, warranty, obligation or issue that is specifically and directly addressed in and covered by the contract cannot form the basis of a fraud in the inducement claim.
However, since several courts view this as an issue of proof, and several have accepted this type of fraud in the inducement claim, it appears it can still be brought so long as the plaintiff can satisfy the burden of proving the defendant's intent not to perform at the time the representation was made.
1) Fraud in the inducement requires proof of: 1) a false statement of material fact; 2) that the defendant knew or should have known was false; 3) that was made to induce the plaintiff to enter into a contract; and 4) that proximately caused injury to the plaintiff when acting in reliance on the misrepresentation.