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- Fraudulent misrepresentation refers to deliberate deception to influence a legal transaction.
- The regulation of fraudulent misrepresentation can be found in § 123 para. 1 BGB.
- Required elements: deceptive act, intent, causality, and unlawfulness.
- The determination has far-reaching legal consequences, including the right of appeal and retroactive nullity.
- Rescission must take place within one year of the discovery of the deception.
- The burden of proof lies with the disputing party, with possible relief from the burden of proof in certain cases.
- Current developments relate to information obligations and consumer protection in the digital environment.
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. act of 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 incorrect.
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:
The fraudulent misrepresentation can take place in various ways:
1. active deception:
Deliberate misrepresentation of false facts.
2. deception by omission:
Concealment of relevant information despite the 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 determination of fraudulent misrepresentation has far-reaching consequences:
1. right of rescission:
The deceived party can contest the declaration of intent (Section 123 (1) BGB).
2. retroactive nullity:
If the challenge 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. criminal consequences:
In serious cases, fraudulent misrepresentation can 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 challenge must be made within one year (Section 124 (1) BGB).
2. start of period:
The period 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):
An error is an erroneous formation of will without external influence.
2. immoral damage (Section 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 rescission.
Practical significance and areas of application:
Fraudulent misrepresentation plays an important role in various areas of law:
1. contract law:
Especially for complex contracts or company acquisitions.
2. insurance law:
In the event of false information provided by the policyholder when the contract is concluded.
3. employment law:
In the event of deception in the application process or in the case of termination agreements.
4. company law:
When forming 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 disputing party must prove the deception and its causality.
2. facilitation 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 (§ 195 BGB).
Current developments and case law:
The case law on fraudulent misrepresentation is constantly evolving:
1. information obligations:
Tendency to extend information obligations 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.
