Material Misrepresentations Can Invalidate a Contract
Business and Commercial Disputes By Harvey Binnall PLLC - 2019/02/28 at 07:00pm
Experienced Alexandria Business Dispute Lawyer
If you’ve breached a contract, then you could be exposed to significant civil damage liability as a result. When defending against a breach of contract claim, however, it’s important to understand that there are a variety of ways in which you can avoid liability.
One common defense strategy is to assert that the plaintiff made material misrepresentations relating to the contract, thus invalidating it. An invalid contract is simply not enforceable, and as such, you cannot be held liable for breach.
Misrepresentation and Contractual “Meeting of the Minds”
Contracts are only valid if the parties involved give their knowing and informed consent to the agreement. There must be a “meeting of the minds” regarding all relevant terms in the underlying contract.
Now, misrepresentation involves a false statement — it need not be intentional. If the other party to a contract misjudged their ability to deliver goods in a timely manner, for example, then they still misrepresented their ability to deliver the goods in a timely manner, even if they did not intentionally do so (and it was simply a mistake).
Misrepresentation can invalidate a contract, but it’s not always straightforward. In order for the contract to be invalidated, the misrepresentation must be material.
The Issue of Materiality
Misrepresentation will not itself invalidate a contract. Why? The misrepresentation at-issue may not be have been central to the contractual bargain.
Suppose, for example, that a manufacturer enters into an agreement to manufacture toys for a retail store chain. The agreement includes terms that describe the materials used in the toy. If the manufacturer uses a cheaper material that is functionally the same (with no downsides), then their misrepresentation of the materials used will not be material, as it would not have altered the contract.
Generally, a material misrepresentation is one that would have affected whether the other party entered into the contract.
Contact Harvey & Binnall, PLLC to Request a Consultation
Harvey & Binnall, PLLC is a boutique commercial litigation firm located in Alexandria, VA and serving clients throughout Virginia, Maryland, and the D.C. metro region. We have many decades of experience advocating on behalf of parties involved in a wide variety of contract litigation. Over the years, we have successfully litigated numerous claims in which the central matter in dispute is whether there was a material misrepresentation that invalidated the contract at-issue, thus shielding the breaching party from liability.
In the contract dispute context, the ability to negotiate a favorable settlement compromise is critical to securing a cost-effective resolution to the legal conflict. We are practical litigators who understand the value of an aggressive approach, when necessary — unlike many commercial litigation firms, our attorneys have experience trying cases to conclusion, giving us a reputation as willing and able trial advocates. This allows us to negotiate from a position of strength.