Defending Yourself Against a Fraud Claim Arising Out of a Contractual Relationship
- Topics:
- Regulatory issues
- Tags:
- Business Operations,
- Fraud,
- Fraud Claim,
- Litigation
- Source:
- Reed Elsevier
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Overview: When a business or other contractual relationship sours, resulting in economic loss and hard feelings, it is a safe bet that litigation will follow. Although highly difficult to prove, fraud claims can lead to significant risks, burdens and expenses that might not exist with respect to a run-of-the-mill breach of contract claim. First, a fraud claim, if permitted to stand, can permit recovery even where the defendant did not breach any express provision of the parties' written contract. Second, a fraud claim may, in some cases, expand the scope of permissible pre-trial discovery. Third, a pending lawsuit that alleges fraud - even one that lacks factual merit - has the potential to cause grave embarrassment and to damage the defendant's reputation in the community. Finally, a successful fraud claim can open the door for a possible award of punitive damages. Pennsylvania law surrounding the gist of the action and economic loss doctrines is still emerging, and is far from clear. Additionally, successful application of either doctrine necessarily turns upon the unique factual circumstances of a particular case. However, recent decisions indicate that Pennsylvania courts may be increasingly willing to dismiss a tort claim - even one based upon a theory of intentional fraud - when the proper remedy is an action for breach of contract.
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Format: HTML | Date: May 2003 | Pages: 1
