MBE Rules · Torts
Intentional misrepresentation (fraud)
The rule
Elements: (1) misrepresentation of material fact, (2) scienter (knowledge of falsity or reckless disregard), (3) intent to induce reliance, (4) causation (actual and justifiable reliance), (5) damages (pecuniary). Predictions and opinions usually not actionable. Special relationships (fiduciaries) may convert silence to actionable fraud.
In plain English
Fraud happens when someone lies about something important, knows it's a lie, wants you to believe it, and you end up losing money because you trusted them.
Worked example
The defendant tells a buyer that a car has never been in an accident, knowing it has. The buyer trusts this and buys the car, later discovering the damage and losing money on repairs. This is fraud.
Memory hook
Fraud: Facts, Falsity, Fool, Fallout. Mislead with intent, they believed and lost money.
The trap
Students think: Opinions count as fraud. Wrong, because predictions or opinions aren't typically actionable. The actual test is misrepresentation of a material fact.
How examiners test it
The MBE loves: seller makes a bold prediction about future profits. Question: fraud? Trap: students assume it's actionable, but predictions aren't unless there's a special relationship.
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