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Q:
What type of false statement will validate a defense of fraud in a New York breach of contract matter?

A:
In order to claim fraud as a defense to a New York breach of contract allegation, you will need to demonstrate the following:
  • A statement was made or an important fact was omitted.
  • The statement made was false.
  • The party making the false statement had an intent to deceive.
  • The injured party reasonably relied on such statement.
  • That reliance resulted in an injury.

The statement that was made must have been one of fact. This means that an opinion, such as “this business will be very profitable,” does not suffice to evidence a fraud defense. Instead, the statement made must state an alleged fact, such as “this business made $500,000 last quarter.”

Even if there was no statement made, fraud may still have occurred. If the other party to the contract omitted an important fact, this may still constitute fraud. However, similar to the requirements for a fraudulent statement, the fraudulent omission must also be a fact, not an opinion.

Typically, in situations where the other party to the contract makes a statement that is a half- truth, this alone will not serve as a valid defense for the breach of the agreement. The bargaining over the contract must have occurred at arm’s length in order for the defense of fraud to fail. However, in instances where one party to the contract had a close and trusting relationship with the other, a half-truth may be sufficient to support the defense of fraud. An example of such a relationship would be between an investment advisor and his or her client.

To learn more about defending a business litigation matter, contact an experienced New York breach of contract attorney today. Call our office at (888) 497-3410 for a consultation.