Arthur R. Lehman, L.L.C.

Fraud during contract negotiations can hurt a business

Rarely do organizations agree to terms with their partners, vendors and other associates on the first pass of review over new contracts. In fact, a New York business may go through numerous iterations of an agreement before it is ready to sign off on it and bind itself to the terms set forth therein. When a business enters into a contract it is responsible for fulfilling its responsibilities and can be penalized if it fails to follow through on its promises.

However, not every contract that a business may sign may be in its interests. In some cases, businesses may be induced into entering into contracts that ultimately do not serve their needs. They may have been compelled to agree to the terms offered to them because the other party or parties to the agreements perpetrated fraud upon them.

When a party misrepresents itself or its power to fulfill the terms of a contract it may have committed fraudulent misrepresentation in its inducement of the other party to agree. If the other party suffers harm such as business losses or lost business opportunities because of the fraudulent misrepresentation then the aggrieved party may have the right to sue for its damages.

Fraudulent misrepresentation is a serious business tort that can have significant financial and legal repercussions for a business. It is always wise for a business to have an attorney review its agreements before signing them; however, when a business discovers that it has been made the victim of a business tort such as fraudulent misrepresentation it should protect its rights to seek compensation for its losses with the help of a dedicated business attorney.

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