Fraudulent misrepresentation

Definition and legal basis:

Fraudulent misrepresentation is a legal term from German civil law and refers to the deliberate misleading of a person in order to induce them to conclude a legal transaction. It is regulated in Section 123 (1) of the German Civil Code (BGB) and constitutes grounds for rescission. Fraudulent misrepresentation enables the person deceived to contest the declaration of intent brought about by the deception and thus to render the legal transaction retroactively invalid.

Elements of fraudulent misrepresentation:

The following elements must be fulfilled for the existence of fraudulent misrepresentation: 1. deception:
Misrepresentation of false facts or suppression of true facts. 2. intent (fraudulent intent):
The deceiver must know or at least consider it possible that his statements are false. 3. causality:
The deception must have been the cause of the declaration of intent. 4. unlawfulness:
The deception must be unlawful, i.e. in breach of a legal obligation.

Forms of fraudulent misrepresentation:

Fraudulent misrepresentation can occur in various ways: 1. active misrepresentation:
Deliberate misrepresentation of false facts. 2. deception by omission:
concealment of relevant information despite an obligation to provide information. 3. deception by third parties:
Deception by a person who is not a party to the contract (Section 123 (2) BGB).

Legal consequences of fraudulent misrepresentation:

The finding of fraudulent misrepresentation has far-reaching consequences: 1. right of avoidance:
The deceived party can contest the declaration of intent (Section 123 (1) BGB). 2. retroactive nullity:
If the avoidance is successful, the legal transaction is null and void from the outset. 3. claims for damages:
Possible claims arising from culpa in contrahendo (Sections 280, 311 (2) BGB). 4. consequences under criminal law:
In serious cases, fraudulent misrepresentation may also be relevant under criminal law (e.g. fraud, Section 263 StGB).

Contestation period and declaration:

Rescission due to fraudulent misrepresentation is subject to certain deadlines and formal requirements: 1. deadline:
The rescission must be made within one year (Section 124 (1) BGB). 2. commencement of the time limit:
The time limit begins with the discovery of the deception. 3. form:
The declaration of avoidance can be made in any form, but should be made in writing for reasons of proof. 4. addressee:
The declaration must be made to the opposing party.

Differentiation from other legal institutions:

Fraudulent misrepresentation must be distinguished from related concepts: 1. error (Section 119 BGB):
In the case of error, there is an erroneous formation of intent without external influence. 2. immoral damage (§ 826 BGB):
No conclusion of a contract is required here, only intentional immoral damage. 3. warranty law:
In the event of defects in a purchased item, warranty rights apply primarily, not avoidance. Practical significance and areas of application: Fraudulent misrepresentation plays an important role in various areas of law: 1. contract law:
Particularly in the case of complex contracts or company acquisitions. 2. insurance law:
In the case of false statements made by the policyholder when concluding the contract. 3. employment law:
In the event of deception in the application process or termination agreements. 4. company law:
When founding companies or joining partnerships.

Burden of proof and procedural aspects:

Special rules of evidence apply in legal disputes concerning fraudulent misrepresentation: 1. burden of proof:
The challenging party must prove the misrepresentation and its causality. 2. relief of the burden of proof:
In certain cases, the burden of proof may be reversed or eased. 3. circumstantial evidence:
Often, fraudulent intent must be inferred from objective circumstances. 4. limitation period:
Claims arising from fraudulent misrepresentation are generally time-barred after three years (Section 195 BGB).

Current developments and case law:

Case law on fraudulent misrepresentation is constantly evolving: 1. Duty to provide information:
Tendency to extend duties to provide information in certain contractual relationships. 2. digitalization:
New issues in the context of online contracts and automated systems. 3. consumer protection:
Increased consideration of consumer protection aspects in the assessment of deception. 4. international aspects:
Treatment of fraudulent misrepresentation in cross-border contractual relationships.

Summary and outlook:

Fraudulent misrepresentation is an important instrument for protecting freedom of will in legal transactions. It makes it possible to withdraw from contracts that have been concluded through deliberate deception. In an increasingly complex business world, careful examination of the contractual basis and transparent communication between the parties is becoming increasingly important. At the same time, the challenge remains to find an appropriate balance between the protection of the deceived party and legal certainty in business transactions. Developments in case law and legislation will continue to aim to master this balancing act while taking new technological and social developments into account.