Question
nnnnWhich of the following represents a gross misrepresentation by an agent?
nnnnSelections
nnnnA. The representation is an obvious falsehood
nnnnB. The representation is made with the knowledge of it being a falsehood
nnnnC. The representation caused the aggrieved party to enter into the contract
nnnnD. All of the above
nnnnnnnnnnnn
Answer: D
nnnnnnnn
5 Keys Summary
nnnn• Gross misrepresentation, categorized as actual fraud, occurs when an agent makes an intentional misrepresentation or suppresses facts, meaning the statement is an obvious falsehood.
nnnn• This fraud is defined specifically when the agent acts with knowledge of the falsehood (or makes a false statement knowingly and willingly) with the intent to deceive another party.
nnnn• For the misrepresentation to be actionable, the aggrieved party must be relying on the false statement, which ultimately caused them to enter into the contract and suffer loss or harm.
nnnn• Mutual consent, an essential element of a valid contract, cannot exist if a party entered the agreement due to reliance upon deliberate deception or misrepresentation.
nnnn• Since gross misrepresentation requires the presence of an intentional lie (A and B) that causes consequential action by the injured party (C), the proper classification encompassing all necessary elements is All of the above.
nnnnnnnn