Texas Causes of Action & Affirmative Defenses

Texas Causes of Action & Affirmative Defenses

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Friday, May 27, 2011

Use of fraud to get someone to sign contract is actionable

TEXAS LAW RECOGNIZES DUTY NOT TO USE FRAUD TO PROCURE ASSENT TO CONTRACT Under Texas law, a party to a contract has “a duty to abstain from inducing another to enter into a contract through the use of fraudulent misrepresentations.” Formosa Plastics Corp. USA v. Presidio Eng’rs & Contractors, Inc., 960 S.W.2d 41, 46 (Tex. 1998). ELEMENTS OF FRAUD At common law, fraud is generally considered to have occurred when (a) “a party makes a material misrepresentation,” (b) “the misrepresentation is made with knowledge of its falsity or made recklessly without any knowledge of the truth and as a positive assertion,” (c) “the misrepresentation is made with the intention that it should be acted on by the other party,” and (d) “the other party relies on the misrepresentation and thereby suffers injury.” Comm. on Pattern Jury Charges, State Bar of Tex., Texas Pattern Jury Charges: Business, Consumer, Insurance & Employment PJC 105.2 (2010). Also see --> fraudulent inducement of contract as distinct cause of action Rescission is an equitable remedy available in cases of fraud. See Bank One, Tex., N.A. v. Stewart, 967 S.W.2d 419, 455 (Tex. App.—Houston [14th Dist.] 1998, pet. denied). SOURCE: Beaumont Court of Appeals - 09-10-00364-CV - 5/26/11

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