Typically, a commercial transaction induced by false statements of fact is not a transaction you are bound to. Where a party has made representations that they knew were false, or made recklessly without care for their truth, and you entered into a contract or parted with money in reliance on those representations, Australian law provides specific remedies — rescission of the contract, recovery of financial loss, and in appropriate cases, exemplary damages.

EAGLEGATE advises businesses, investors, directors, and individuals on fraudulent misrepresentation claims — both bringing claims for losses caused by fraud and defending allegations. The commercial law, financial and scientific backgrounds within EAGLEGATE’s team give EAGLEGATE a methodical, evidence-focused approach to fraud and misrepresentation matters.

A transaction entered into because of fraud is voidable. The question is whether you act quickly enough to exercise that right.

Key Fraudulent Misrepresentation Expertise — Prove, Rescind, Recover

EAGLEGATE advises on every aspect of fraudulent misrepresentation claims.

Elements of the Tort of Deceit

At common law, fraudulent misrepresentation (the tort of deceit) requires proof of five elements:

(1) a false representation of fact (not a mere statement of opinion, or a prediction or promise about the future, unless the maker never held the stated intention);

(2) made knowingly, or without belief in its truth, or recklessly as to whether it was true or false;

(3) made with the intention of inducing the plaintiff to act on it;

(4) the plaintiff in fact acted in reliance on the representation; and

(5) the plaintiff suffered loss or damage as a result.

Each element must be established by evidence — EAGLEGATE builds these cases from the ground up, identifying the representations, the knowledge or recklessness, and the causal chain to loss.

Statutory Misleading Conduct

In addition to the common law tort of deceit, the Competition and Consumer Act 2010 (Cth) — specifically section 18 of the Australian Consumer Law (ACL) — prohibits misleading and deceptive conduct in trade or commerce. Unlike the tort of deceit, the ACL claim does not require proof of intention or knowledge — it requires only that the conduct was, in all the circumstances, misleading or deceptive or likely to mislead or deceive. This lower threshold makes ACL claims a powerful supplement to common law deceit claims in commercial fraud matters.

Rescission of Contract

Where a contract was induced by fraudulent misrepresentation, the innocent party has the right to rescind the contract — to return the parties to their pre-contract positions. Rescission is an equitable remedy and may be lost if: the innocent party affirms the contract (continues to act on it with knowledge of the fraud); a third party acquires rights under the contract; or restitution is no longer possible. Acting quickly to rescind preserves this remedy.

Damages for Deceit

Where the innocent party has suffered financial loss caused by reliance on the fraudulent misrepresentation, damages in the tort of deceit are available. Importantly, damages for deceit are assessed on a different basis from contract damages, and are not limited by the rules of reasonable foreseeability that cap contractual (and negligence) claims. The defendant is liable for all actual loss that directly flows from the fraudulently induced transaction, including consequential losses that were not foreseeable when the misrepresentation was made. This can include losses that go well beyond the transaction value itself.

Business Sales and Acquisition Fraud

Fraudulent misrepresentation arises most frequently in business sales — where a vendor misrepresents revenue, profitability, customer contracts, staff arrangements, or the condition of assets to induce a buyer into the transaction. EAGLEGATE advises purchasers who have discovered that the business was not as represented, and vendors defending such claims.

1. Identify the Representations

We identify precisely what representations were made, when, by whom, and in what context — through review of pre-contract correspondence, information memoranda, vendor representations, and due diligence materials.

2. Establish Falsity and Knowledge

We establish that the representations were false and that the maker knew them to be false, or was reckless as to their truth — the critical element distinguishing fraudulent misrepresentation from innocent or negligent misrepresentation.

3. Quantify the Loss

We build a defensible quantification of the financial loss caused by reliance on the fraudulent representations — including consequential losses where recoverable.

4. Pursue Rescission or Damages

We advise on whether rescission or damages (or both) represent the optimal outcome, and pursue the preferred remedy through negotiation or litigation.