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Filing a Claim for Fraud: What Business Owners in Florida Need to Know

If a vendor, supplier, contractor, strategic partner or other commercial entity has defrauded your business, it will be important for you to make informed decisions about your next steps. While businesses can pursue claims for various forms of fraud, establishing a fraud claim requires a methodical and strategic approach, and time can be of the essence in some cases. Consulting with a Miami fraud lawyer is a key first step, and if you believe your business may have a claim for fraud, we strongly encourage you to speak with one of our lawyers right away.

Proving a Claim for Commercial Fraud

There are several different types of fraud claims under Florida law. Fraud claims can arise in various scenarios, and the specific circumstances involved will dictate what a plaintiff needs to prove in order to recover damages or secure other appropriate remedies.

With that said, two types of fraud claims are particularly common in the commercial litigation context. These are:  (i) fraudulent misrepresentations and omissions; and, (ii) fraudulent inducement.

1. Fraudulent Misrepresentations and Omissions

Fraudulent misrepresentation and omission claims arise when one party intentionally deceives another. For example, if a contractor represents that it used high-grade materials when in fact it used lower-cost materials that were unsuitable for the job, this could give rise to a claim for fraud (perhaps in addition to a claim for breach of contract).

Generally, there are five “elements” to a claim for commercial fraud under Florida law:

  • The defendant intentionally made a false statement concerning a material fact;
  • The defendant knew (or should have known) that the statement was false when it was made;
  • The defendant intended for the plaintiff to rely on the false statement;
  • The plaintiff justifiably relied on the false statement and,
  • The plaintiff suffered losses as a result of its reliance.

If a plaintiff can prove each of these elements, then the plaintiff may be entitled to some (or all) of the remedies we discuss below. When determining which remedy (or remedies) to pursue, business owners should work with their counsel to assess their total losses and determine whether damages are a sufficient remedy in light of the circumstances at hand.

2. Fraudulent Inducement

Fraudulent inducement is a specific type of commercial fraud claim that arises when one party misrepresents or omits material information in order to cause another party to enter into a contract. The elements of a fraudulent inducement claim are substantially similar to those of a claim for general commercial fraud. Examples of potential grounds to pursue a fraudulent inducement claim in Florida include:

  • Misrepresenting a company’s financial standing
  • Misrepresenting a company’s credentials, client list or past projects
  • Misrepresenting a company’s ability or intent to comply with a proposed contract
  • Failing to disclose known defects or other issues with a company’s products
  • Failing to disclose pending litigation, bankruptcy, liabilities or other relevant risks

Again, these are just examples, and whether plaintiffs can pursue claims based on these (and other) misrepresentations and omissions ultimately depends on the circumstances of each particular case. An experienced Miami fraud lawyer should be able to evaluate all potential grounds for pursuing a claim and help you make informed decisions about how best to proceed.

Remedies Available in Commercial Fraud Litigation

If you decide to move forward with pursuing a commercial fraud claim, you will also need to work closely with your business’s Miami fraud lawyer to determine which remedies to pursue. The types of remedies that are available in commercial fraud litigation generally include:

1. Compensatory Damages

Compensatory damages are intended to replace a business’s losses resulting from a fraudulent misrepresentation or from fraudulent inducement. This includes not only direct financial losses, but also loss of business relationships and opportunities.

2. Contract Rescission

In fraudulent inducement cases, contract rescission may also be an appropriate remedy. Frequently, when contract rescission is warranted, compensatory damages and/or other remedies will be warranted as well.

3. Injunctive Relief

Plaintiffs can seek an injunction to prevent defendants from continuing to engage in fraudulent conduct in appropriate cases. Injunctive relief can be especially important in cases involving loss of business relationships and opportunities, and where allowing the defendant to continue interfering with a legitimate business interest will lead to additional losses.

4. Specific Performance

Specific performance is the opposite of injunctive relief. Rather than prohibiting a defendant from engaging in certain conduct, an order for specific performance requires the defendant to take certain action, such as redoing a job with the appropriate materials.

5. Punitive Damages  

Punitive damages are also available in some circumstances. Whereas compensatory damages are intended to allow plaintiffs to recoup their losses, punitive damages are intended to punish the defendant and deter similar fraudulent conduct in the future.

The Role of Contracts in Commercial Fraud Cases  

When commercial parties have entered into a contract, the terms of their contract can impact fraud-related litigation in various ways. For example, commercial contracts often include “integration” clauses that prevent either party from claiming reliance on statements made prior to the contract’s execution. However, the law of fraudulent inducement still allows defrauded parties to pursue claims in many cases.  

Commercial contracts’ dispute resolution clauses can come into play as well. For example, if the parties agreed to a damages cap or a limitations period shorter than Florida’s four-year statute of limitations for fraud claims or if they agreed to resolve disputes via mediation or arbitration, this could potentially limit either party’s ability to pursue appropriate remedies in court. But, if a fraud claim arises outside of the parties’ contract, then these limitations may not apply.

Speak with a Miami Fraud Lawyer at Edelboim Lieberman in Confidence

This only scratches the surface of what you need to know if you believe that your business may have a claim for commercial fraud. If you would like to know more, we invite you to get in touch. To speak with an experienced Miami fraud lawyer in confidence as soon as possible, please call 305-768-9909 or contact us online today.

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