Dealing With Fraud When Negotiating Business Agreements

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Contracts are important documents for most Tennessee businesses. Through contracts, a business can hire new employees, retain the services of vendors, buy supplies and inventory, and acquire new capital to grow. The strength of a contract often resides in the planning that took place before it was executed, because problems in contracts can lead to disputes and litigation later on between the parties.

One issue that can arise in a business contract is an allegation of fraudulent misrepresentation. Fraudulent misrepresentation is a form of fraud that involves basing a contract on false information or omissions. For example, if a party to a contract knowingly misleads the other party and entices them into entering into an agreement, fraudulent misrepresentation may be alleged in a later legal proceeding.

Consider a prospective contract between a vendor and a business for the purchase of goods. The business wants to buy 100 units of the goods and wants them to be delivered by the vendor in two days. If the business contracts under those terms but knows that it can only provide 50 units by the deadline, then they may have misled the business and caused it to suffer damages as a result of its misrepresentation.

Creating strong and sound contracts can be complicated as each agreement must be negotiated and drafted to encompass different and goal-specific needs. For businesses that want to avoid disputes and potential claims of fraudulent misrepresentation, seeking the help of business law attorneys can be a good idea. Attorneys can support their clients in their efforts to minimize legal hurdles and advance their businesses’ growth over time.

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