Your Legal Guide Through Business, Fraud, Real Estate, And Other Legal Disputes

Seren Legal

The basics of fraud in the inducement in California

On Behalf of | Nov 16, 2022 | Business partnership disputes

As a general rule, when someone makes a promise to another before entering a contract, and that promise doesn’t make it into the written contract signed by both parties, that promise won’t be enforceable. California courts assume that the parties knew about that pledge but chose to omit it. However, if someone makes a pledge with the intention to make the other party do something or induce them into an agreement, then the court would hold them accountable if they fail to deliver on that promise.

Understanding fraudulent inducement

Fraudulent inducement is a type of fraud that occurs when one party misrepresents information or makes false statements to another party to convince them to enter into a contract. An example might be if someone tells you they will pay you $500 to do a survey, but that promise is outside the written agreement. If the person doesn’t pay you the $500 after fulfilling your part of the deal, according to business law, you can sue them for fraud.

Elements of fraudulent inducement

The first constituent of this type of fraud is that there must have been a misrepresentation or false statement made by one party. This can be in the form of an omission as well.

The second element is that the fraudulent party made this statement with the intention of convincing the other person to do something or enter into an agreement. This means that if someone makes a false statement by accident, it’s not fraudulent inducement.

The third and final requirement for fraudulent inducement is that the other person relied on this information and suffered damages as a result. In other words, they would not have entered into the contract had they known the true nature of the agreement.

If you want to sue someone for fraud by inducement, it’s important to clearly understand what that person said or promised before entering into any contract. If there is anything that you’re uncertain about, make sure to ask questions and get clarification. It’s also a good idea to have any promises made in writing so that you have evidence to back up your claim if it ever comes down to it.