Texas Causes of Action & Affirmative Defenses

Texas Causes of Action & Affirmative Defenses

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Friday, July 29, 2011

Avoiding contract based on fraud in the inducement

FRAUDULENT INDUCEMENT AS DEFENSE TO ENFORCEMENT OF CONTRACT

A contract is subject to avoidance on the ground of fraud. Williams v. Glash, 789 S.W.2d 261, 264 (Tex. 1990); see Cecil v. Zivley, 683 S.W.2d 853, 857 (Tex. App.—Houston [14th Dist.] 1984, no writ).

To prevail on a fraudulent-inducement contention, a party must establish the elements of fraud ―as they relate to an agreement between the parties. Haase v. Glazner, 62 S.W.3d 795, 798–99 (Tex. 2001).

The elements of fraud are (1) a material misrepresentation, (2) made with knowledge of its falsity or without any knowledge of the truth and as a positive assertion, (3) made with the intention that it should be acted on by the other party, and (4) the other party acts in reliance on the misrepresentation and thereby suffers injury. See Formosa Plastics Corp. USA v. Presidio Eng’rs & Contractors, Inc., 960 S.W.2d 41, 47–48 (Tex. 1998).

SOURCE: Houston Court of Appeals - 14-09-00312-CV - 7/26/11 - McLernon v. Dynegy Inc.