Q—I think my customer’s agent defrauded me; is my customer still liable for that?
Obviously, the creditor should establish that Defendant is responsible for the false representation. Almost always, the named Defendant will be the person actually making the representation, but there are also a few limited situations where an employer may be vicariously liable, for the fraudulent act of its employee, or the Defendant may be vicariously liable for the act of another if that person benefitted from the fraudulent transaction and had knowledge of the fraud; also, an agent may be individually liable for his own act of fraud performed for its principal. NationsBank v. Dilling 922 SW2d 950 (Tex. 1996). As to a Dallas debt collection, only the principal’s conduct is relevant, not the agent’s conduct. Nations , above at p. 953.
Q—What is meant by “a material misrepresentation”?
Although it is usually the case that the Defendant is making a false representation directly to the creditor/factor, there are also situations when the Defendant may be named when it indirectly defrauds the creditor by making a false representation to a third party with the intention that it be repeated to the Plaintiff, or that the expectation is that the Plaintiff will act upon it. One of the elements is that the representation be “material.” This means that a reasonable person would attach importance to, and be induced to act upon the information, in determining whether to make a transaction.
Although it may seem obvious, courts have defined “false statement of fact” as ‘an untrue, deceptive or misleading statement, concerning a past or present fact’. State Nat’l. v. Farah Mfg.; 678 SW2d 681 (El Paso 1984). More problematic, especially in several Dallas collection cases I have had over the years, is whether the Defendant’s false statement is only of his opinion. Generally, an expression made by a Defendant that is purely his opinion, is not considered a false representation, and therefore, not fraudulent. In order to be considered a fraudulent misrepresentation, the Defendant’s statement must concern facts as opposed to mere opinion, judgment, probability, or expectation, however, the Texas Supreme Court recognizes several exceptions to that general rule, as follows:
If you have any questions about business disparagement or need help with business debt collections in Dallas Texas, We Can Help – Give Us a Call: 214-752-8800 or Email Us: firstname.lastname@example.org
*The foregoing is not intended to provide specific legal advice, but instead only as a generalized discussion
Sam Emerick has over 35 years
experience in Commercial Collections Law,
Factoring Litigation and Wills, Trusts & Probate