⚠ What is Fraud/Misrepresentation?
Fraud occurs when someone makes a false statement of fact, knows it is false (or makes it recklessly), intends for you to rely on it, and you do rely on it to your detriment. California provides powerful remedies including canceling the contract (rescission) or suing for money damages.
Types of Fraud Claims I Handle
🚩 Intentional Fraud (CC 1709)
Deliberate lies or concealment of material facts with intent to deceive. Allows punitive damages.
💡 Negligent Misrepresentation (CC 1710)
False statements made without reasonable grounds to believe they were true. Easier to prove.
👁 Concealment/Nondisclosure
Intentionally hiding material facts the other party had a right to know. Common in real estate.
📝 False Promise
Making a promise with no intention of keeping it at the time. Actionable as fraud in California.
Common Fraud Scenarios
- Used car sales - Odometer rollback, hidden accident history, salvage title concealment
- Real estate - Undisclosed defects, fake repair history, hidden liens or easements
- Business sales - Inflated revenue, hidden liabilities, fake customer lists
- Investments - Fake returns, Ponzi schemes, material omissions
- Home improvement - Contractor lies about licensing, materials, or work quality
- Product sales - Fake specifications, counterfeit goods, false origin claims
💰 Two Powerful Remedies
California gives fraud victims a choice: Rescission (cancel the contract, return what you got, get back what you paid) or Damages (keep what you got, recover the difference in value plus consequential damages). I help clients choose the remedy that maximizes their recovery.
⚖ California Law
California provides strong legal remedies for fraud victims. Here are the key statutes I use in fraud demand letters.
Key California Statutes
Civil Code 1709 (Intentional Fraud)
"One who willfully deceives another with intent to induce him to alter his position to his injury or risk, is liable for any damage which he thereby suffers." This is the foundation for intentional fraud claims.
Civil Code 1710 (Deceit Defined)
Defines four types of deceit: (1) suggestion of false fact, (2) assertion without knowledge of truth, (3) suppression of fact by one with duty to disclose, (4) promise made without intent to perform.
Civil Code 1689 (Rescission)
Allows a party to rescind a contract when their consent was obtained through fraud. Rescission must be exercised promptly upon discovery of fraud and requires restoring what was received.
Civil Code 3294 (Punitive Damages)
Allows punitive damages for fraud claims where the defendant acted with "oppression, fraud, or malice." Requires clear and convincing evidence. Can significantly multiply recovery.
Elements of Fraud You Must Prove
Misrepresentation
Defendant made a false representation of material fact (or concealed a fact they had duty to disclose)
Knowledge of Falsity (Scienter)
Defendant knew the statement was false, or made it recklessly without caring if true (for negligent misrep: no reasonable grounds to believe true)
Intent to Induce Reliance
Defendant made the statement intending that you rely on it in making your decision
Justifiable Reliance
You actually and reasonably relied on the false statement in entering the transaction
Resulting Damage
You suffered actual damages as a result of your reliance on the misrepresentation
Rescission vs. Damages: Which to Choose?
| Factor | Rescission (CC 1689) | Damages (CC 1709) |
|---|---|---|
| Goal | Undo the deal completely | Keep the deal, recover losses |
| Recovery | Return of payments + incidental costs | Benefit of bargain + consequential damages |
| What you return | Must give back what you received | Keep what you received |
| Best when | Product/property is worthless to you | Product has value but less than represented |
| Punitive damages | Generally not available | Available with clear and convincing proof |
💡 Act Promptly for Rescission
Rescission rights can be waived by delay. Once you discover the fraud, you must act promptly to rescind. Continuing to use the product, making payments, or unreasonable delay after discovering fraud can forfeit your rescission rights. I help clients assess timing and preserve their remedies.
🔍 Evidence Checklist
Fraud cases require strong evidence. I help clients document their claims effectively before sending the demand letter.
💬 The False Statement
- ✓Written statements (emails, texts, ads)
- ✓Marketing materials and brochures
- ✓Recorded calls (if legal in your state)
- ✓Witness statements
✗ Proof of Falsity
- ✓Expert inspection reports
- ✓Third-party verification (Carfax, etc.)
- ✓Contradicting documents
- ✓Actual condition photos/videos
💰 Your Damages
- ✓Purchase price/contract amount
- ✓Actual value assessment
- ✓Repair/replacement costs
- ✓Consequential losses
👤 Defendant's Knowledge
- ✓Prior complaints about same issue
- ✓Expert knowledge of defendant
- ✓Access to information you lacked
- ✓Pattern of similar misrepresentations
⚠ Fraud Must Be Pled with Specificity
California courts require fraud claims to be alleged with particularity - who, what, when, where, and how. General claims of "they lied to me" will fail. I help clients document the specific false statements, when and how they were made, and exactly how they were false.
📝 Demand Letter Templates
Below are sample paragraphs for fraud demand letters. I offer both rescission and damages versions.
⚠ Choose Rescission OR Damages - Not Both
You cannot both rescind the contract (get your money back) AND recover damages for lost profits. Choose the remedy that maximizes your recovery. I help clients make this decision before sending the demand.
❓ Frequently Asked Questions
Intentional fraud (CC 1709) requires proving the defendant knew their statement was false or made it recklessly without caring whether it was true. Negligent misrepresentation (CC 1710) only requires proving the defendant had no reasonable grounds for believing the statement was true. Negligent misrep is easier to prove but may limit your damage recovery. Both allow rescission of the contract.
For intentional fraud, yes - you must prove "scienter," meaning the defendant knew the statement was false or made it recklessly. However, California law provides alternatives: negligent misrepresentation only requires proving they lacked reasonable grounds to believe it was true, and for rescission under CC 1689, you only need to prove a material misrepresentation induced your consent, regardless of intent.
Generally, you must choose one remedy. Rescission cancels the contract and returns both parties to their pre-contract positions - you get your money back, they get their product back. Damages keep the contract in place and compensate for losses. You cannot recover purchase price through rescission AND also recover lost profits as damages. However, you may recover incidental expenses even with rescission.
The statute of limitations for fraud is 3 years under CCP 338(d), but it does not begin running until you discover (or should have discovered) the facts constituting the fraud. This "discovery rule" can extend the deadline significantly if the fraud was concealed. For rescission, you must act promptly upon discovering the fraud - unreasonable delay can waive rescission rights.
💼 How I Help With Fraud Claims
I handle California fraud and misrepresentation cases, from initial demand letters through trial. Fraud cases require careful documentation and strategic remedy selection.
My Services
| Service | Fee |
|---|---|
| Case Evaluation - Review facts, assess fraud elements, recommend remedy | $240/hr |
| Demand Letter - Comprehensive fraud demand with rescission or damages claim | $450 flat fee |
| Rescission Letter Package - Formal rescission notice + return/refund coordination | $450 flat fee |
| Litigation - Full representation through trial | 33-40% contingency |
💡 Contingency Available for Strong Cases
For clear fraud cases with documented misrepresentations and significant damages, I may take your case on contingency - you pay nothing unless I recover for you. Typical contingency is 33% if resolved pre-suit, 40% if litigation is required.
Believe You Were Defrauded?
I offer a 30-minute consultation to review your situation and help you understand your options.
Contact
Email: owner@terms.law