This article discusses the exception to the rule that any claim for fraud or deception cannot be based on opinion and must be based on a misrepresentation of the facts. In California, the courts use the terms fraud and deception interchangeably. Civil Code 1709 establishes: “Whoever deliberately deceives another with the intention of inducing him to change his position to his detriment or risk, is responsible for any damage he suffers as a result.” Generally, to establish a claim of fraud, it must be shown that there was (1) a misrepresentation; (2) the defendant knew the representation was false and intended the plaintiff to rely on the misrepresentation; (4) the plaintiff reasonably related to the representation and (5) the plaintiff suffered damages as a result.
In the business world, the old adage (buyer beware) still holds true for the most part. Opinions generally cannot be the basis of a fraud claim. A fraud case must be based on a misrepresentation of the facts. An opinion expresses the manufacturer’s uncertain belief as to the existence of a fact, or the manufacturer’s judgment as to the quality or value of a product or service. Most sales talk is opinion. “German engineering is the best in the world.” “Nothing is more reliable than our telecopier repair service.” “No dry cleaner in town does a better job on tough stains.” All of these statements are opinions.
There is one very important exception. The opinion may be the basis for a fraud claim when the filer is considered especially qualified. If a person claims to be an expert or to have special knowledge, then their opinion may be the basis of a fraud claim, although it could not be the basis of a claim if stated by a person who is not an expert and does not have special knowledge. special. .
This situation is not unusual in the business context. If a person presents himself as an expert on the authenticity and value of Picasso’s art, his representation as to the value of a work of art or a collection may be actionable, even if it would be considered a sales pitch or opinion if made . by someone who is not an expert on Picasso.
In one case handled by the author, an individual posing as an expert on a popular surrealist artist sold multiple copies of the artist’s work to a client. The expert stated that all the pieces were good investments. Although the pieces were copies, they had value because only a limited number of copies were made. Later, the expert offered to buy a piece in partnership with the client. The expert told his client that, in his opinion, buying the piece for $300,000.00 – $150,000.00 each– made sense because the piece would continue to appreciate. The expert told the client that in his opinion the piece could be sold today for approximately $400,000.00. When he made the representation, the expert knew that he could not sell the piece for $400,000.00. He also knew that he could buy the piece for $150,000.00.
The client found out about the misrepresentations and sued the expert. The expert tried to avoid the lawsuit by filing a plea called a demurrer which stated that while the facts alleged in the client’s claim may be true, they are insufficient for the client to bring a claim because an opinion cannot be the basis for an action of fraud. . The court overruled the objection and allowed the complaint. The court stated that, since the expert presented himself as specially qualified to appraise the works of this particular artist, his opinions could be the basis of the complaint.
Consumers and businesses deal with sales every day. Buyer beware is generally the rule. But where one party possesses, or purports to possess, superior knowledge or special information with respect to the subject matter of the representation, and the other party can reasonably rely on the superior knowledge or special information, a representation made by the party possessing the knowledge o The information, although it could be considered as the expression of an opinion if it is made by another person, may be the basis for a claim of fraud if it is false.