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Fraud: Intentional Misrepresentation & Negligent Misrepresentation

We hear all the time (and I especially hear it often as an attorney) that so and so defrauded me and that he/she should be thrown in jail and fined for their transgressions. Fraud is a heavy word and it requires strict proof from a legal perspective, both procedurally and substantively.

Fraud in Missouri is broadly bifurcated into two categories: intentional misrepresentation and negligent misrepresentation. Intentional misrepresentation consists of: (1) a representation; (2) its falsity; (3) its materiality; (4) the speaker’s knowledge of its falsity or his/her ignorance of the truth; (5) the speaker’s intent that his/her representation should be acted on by the hearer in the manner reasonable contemplated; (6) the hearer’s ignorance of the falsity of the representation; (7) the hearer’s reliance on the representation being true; (8) the hearer’s right to rely thereon; and (9) the hearer’s proximately caused injury. Clark v. Olson, 726 S.W.2d 718, 721 (Mo. 1987).

Negligent misrepresentation, on the other hand, requires that (1) a speaker supplied information in the course of business or because of some other pecuniary interest; (2) that, due to speaker’s failure to exercise reasonable care, the information was false; (3) that speaker intentionally provided the information for the guidance of a limited group of persons in a particular business transaction; that (4) listener justifiably relied on the information and (5) that as a result of listener’s reliance on the statement, he/she suffered a pecuniary loss. Ligon Specialized Hauler, Inc. v. Inland Container Corp., 581 S.W.2d 906, 909 (Mo.App.E.D. 1979).

As referenced, these are not easy elements to show without pretty precise bits of evidence. Moreover,there are quite a bit nuances in the law. For instance, an affirmative representation is not required for actionable fraud to exist. Murray v. Crank, 945 S.W. 2d 28, 31 (Mo. App. E.D. 1997). Silence or concealment of facts can amount to misrepresentation and serve as a substitute for a fraudulent misrepresentation if the silent party has a duty to speak. Id. The duty to disclose arises from a fiduciary relationship or where one party has superior information not reasonably available to the other party. Id.

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