In a court of law, to prove misrepresentation and/or fraud, there must be evidence that shows a claim was made, said claim was false, the party making the claim knew the claim was false, and that party's intention was for a transaction to occur based upon the false claim.^[1]

Assume two people, Party A and Party B, enter into a contract. Then, it is later determined that Party A did not fully understand the facts and information described within the contract. If Party B used this lack of understanding against Party A to enter into the contract, Party A has the right to void the contract.^[2]

The foundational principle of “caveat emptor,” which means “let the buyer beware,” applies to all American transactions.^[2] In Laidlaw v. Organ, the Supreme Court decided that the buyer did not have to inform the seller of information the buyer knew could affect the price of the product.^[1]

For an innocent misrepresentation, the judge takes into account the likelihood a party would rely on the false claim and how significant the false claim was.^[3]

Contract law does not delineate any clear boundary as to what is considered an acceptable false claim or what is unacceptable. Therefore, the question is what types of false claims (or deceptions) will be significant enough to void a contract based on said deception. Advertisements utilizing "puffing," or the practice of exaggerating certain things, fall under this question of possible false claims.^[2]

Old Version:

Assume two people, Party A and Party B, enter into a contract. Then, it is later determined that Party A did not fully understand the facts and information described within the contract. If Party B used this lack of understanding against Party A to enter into the contract, Party A has the right to void the contract. There are two types of misrepresentation: intentional and innocent. Intentional is more commonly known as fraud. In contract law, fraud is a punishable offense in court. If fraud is proven to have occurred, the innocent party can simply nullify or void the contract.^[2]

In a court of law, to prove fraud (or intentional misrepresentation), there must be evidence that shows a claim was made, said claim was false, the party making the claim knew the claim was false, and that party's intention was for a transaction to occur based upon the false claim. Similarly, for an innocent misrepresentation, the judge takes into account the likelihood a party would rely on the false claim and how significant the false claim was.^[3]

The foundational principle of “caveat emptor,” which means “let the buyer beware,” applies to all American transactions.^[2] In Laidlaw v. Organ, the Supreme Court decided that the buyer did not have to inform the seller of information the buyer knew could affect the price of the product.^[1]

Contract law does not delineate any clear boundary as to what is considered an acceptable false claim or what is unacceptable. Therefore, the question is what types of false claims (or deceptions) will be significant enough to void a contract based on said deception. Advertisements utilizing "puffing," or the practice of exaggerating certain things, fall under this question of possible false claims.^[2]

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