When two parties sign a contract in your business, it’s crucial that both of them understand and are in agreement with the terms. However, if this isn’t the case, your business may face serious risks. Here is everything you need to know about misrepresentation in business.
Types of Misrepresentation
If you’re wondering what is a misrepresentation, there are three main types that you need to be aware of:
- Fraudulent misrepresentation
- Negligent misrepresentation
- Innocent misrepresentation
Fraudulent misrepresentation, the most serious of the three, refers to one party’s act of intentionally making a false statement that forces the other party to enter a contract. A party can also be accused of fraudulent misrepresentation if they don’t believe the truth of their own statement, as seen on https://www.thayerinnes.com/. Negligent misrepresentation occurs when a party fails to ensure the truth of a statement, and innocent misrepresentation refers to when the person making the misrepresentation had good reason to believe that the statement was true.
Responding Appropriately to Misrepresentation
If you feel that you have entered a misleading contract or are being sued for some form of misrepresentation, taking prompt action is crucial to the success of your business. Make sure that you have the proper coverage so you can be prepared for any risk that may target your business.