Fraudulent Misrepresentation: How To Sue a Business Partner

Fraudulent Misrepresentation: How To Sue a Business Partner

When finalizing a business agreement, people don’t expect dishonest misleading information, also known as fraudulent misrepresentation. Even though the process might involve a lot of discussions between parties, most are aiming to agree on terms that work for everyone. Depending on the size of the companies involved, usually, a commercial lawyer within the company handles negotiations, reviews, and finalizes the agreement on behalf of one party.

However, even with the best efforts of the company’s legal team, statements made during negotiations, whether spoken or written, might not end up in the final contract. This doesn’t mean that these statements aren’t part of the overall agreement, but it can create complications for the business relationship.

A common example of these complications is when one business relies on false information given by the other party before agreeing to a contract. This is called fraudulent misrepresentation and can cause significant harm to a business. The good news is that you can take legal action against the party that provided false information, seek compensation for damages, and pursue other solutions.

What exactly is fraudulent misrepresentation? What can you do if someone you’re doing business with gives you false information? How can you take legal action, and what can you ask for in your legal claim? You’ll find the answers to these questions below, and you’ll also learn how a lawyer specialized in business disputes can assist you with your legal conflict.

What Is Fraudulent Misrepresentation?

Fraudulent misrepresentation occurs when someone makes a false representation knowingly, without a belief in its truth, or recklessly as to its truth, for the purpose of misleading someone else into entering a contract. 

To be successful in a legal claim for fraudulent misrepresentation, you must prove it is more likely than not that:

  • The other party made a false representation of fact;  
  • The other party knew the statement was false or was reckless as to whether the statement was true;
  • The other party intended for you to act based on the false statement;
  • You relied on the false statement to act; and
  • You suffered damage relying on the false statement. 

Omitting facts or bending the truth may also be considered fraudulent misrepresentation. This cause of action is meant to protect parties to a contract from damages they would not have incurred had the other side been honest and forthright in negotiations. The remedies you can seek for fraudulent misrepresentation will depend on the circumstances. 

Available Legal Remedies for Fraudulent Misrepresentation

The legal system enforces a person’s rights or tries to remedy injustices through legal orders. When you rely on a business partner’s lie to enter a contract, you can request the court to award you damages or other relief relating to the contract. 

Normally, a monetary award for damages you incurred relying on the fraudulent misrepresentation is enough.  A court will want to put you back in the position you would be in had you not initially entered the contract. You can also seek non-economic damages, such as punitive damages meant to punish and deter the other business from engaging in such behavior again. 

You can seek other remedies as part of a fraudulent misrepresentation claim. Some examples include orders for specific performance requiring the other side to comply with their end of the agreement. You can also seek rescission of a contract to set the agreement aside and ensure your business will no longer be bound by the contract’s terms. 

What you should seek in remedy for fraudulent misrepresentation will depend on the specific circumstances. It is always best practice to explore your options by consulting a commercial litigation lawyer before suing your business partner. 

How to Sue your Business Partner for Fraudulent Misrepresentation

In Ontario, you can sue your business partner for fraudulent misrepresentation by going through the legal process. The five basic steps in a commercial lawsuit under the Ontario Rules of Civil Procedure are:

  • Exchange of pleadings;
  • Conducting examinations for discovery;
  • Mandatory mediation (Toronto, Ottawa, and Windsor);
  • Pre-trial conference; and
  • Trial. 

The first step in bringing an action for fraudulent misrepresentation against your partner is filing, issuing, and serving a statement of claim. To be successful in your claim, you must ensure that you make your case properly with sufficient facts, make the appropriate legal claims, and comply with the Rules

The other side, the defendant, responds to your claim by filing a statement of defense. You may file a reply in response to any new allegations of fact raised by the defendant. A reply is not mandatory and is not for repeating what you have already said in your statement of claim. 

The next step in the lawsuit is the discovery stage.  In the examinations for discovery, both parties exchange relevant documents and ask each other questions for information relating to the case.  

In Toronto, Ottawa, or the Windsor-Essex court regions, you must set down the matter for mediation within 180 days of the first filing of the defense. During mediation, the parties appear before a third-party neutral facilitator and try to settle the matter. This facilitator is not a decision maker but will use their expertise to help the parties compromise instead of proceeding further in litigation. 

After discoveries and mediation, you can serve and file a trial record to set your action down for trial. The court schedules a pre-trial conference after a party sets the matter down for trial. It is like mediation, except a judge acts as the neutral facilitator. This judge would not be the one deciding your case at trial. The court schedules a trial date if the parties fail to settle the case at the pre-trial conference.  

As straightforward as this might seem, a commercial litigation lawyer can help in a variety of ways to maximize your chances of success and achieve the results you want. 

How a Commercial Litigation Lawyer Can Help 

The legal process can be complicated, given the number of rules involved and the expertise needed to navigate every step. Pitfalls like failure to plead your case properly, provide sufficient evidence, ask the right questions at discoveries, or make weak legal arguments at trial can needlessly hurt your case.

A commercial litigation lawyer can work with you to identify whether you should bring a fraudulent misrepresentation claim, and help you navigate every step of the legal process to maximize your chances of winning. 

A commercial litigation lawyer can also help you to take pre-litigation steps that make a lawsuit unnecessary. Many cases settle before a claim is even started, and that could save your business time, effort, and costs. Being a negotiator and advocate is as much a legal skill set as knowing how to navigate the legal process.

Even if a legal claim for fraudulent misrepresentation seems relatively simple, there are hidden landmines and pitfalls a commercial litigation lawyer can help you avoid. A consultation with a commercial litigation lawyer is best to determine what next steps you should take and what options are on the table before commencing a lawsuit for fraudulent misrepresentation. 

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If your business partner made false representations to trick you into a contract,  you may be able to sue them for fraudulent misrepresentation. While it may seem straightforward, making such a claim without representation by a commercial litigation lawyer can hurt your chances of success.

A commercial litigation lawyer can help you negotiate your case and navigate the litigation process using their knowledge, experience, and expertise. A simple consultation can be enough to give you a sense of what should be done and how the lawyer can help with your case moving forward. If you suspect your business is a victim of fraudulent misrepresentation, you should consult with a commercial litigation lawyer as soon as possible. 

Contact Achkar Law

If you want to sue your business partner for fraudulent misrepresentation and want to know more about your rights and remedies, our Fraud Lawyers at Achkar Law can help.

Contact us by phone toll-free at 1 (800)-771-7882.

Facing Partnership Disputes? Get Legal Help from Achkar Law

Partnership disputes can jeopardize both your business operations and personal relationships. If you’re caught in a partnership dispute, consult with a litigation lawyer at Achkar Law. We provide strategic legal advice to navigate these complex situations, aiming to resolve disputes efficiently while protecting your interests and preserving valuable relationships.



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