This article deals with exceptions to the rule that fraudulent or fraudulent claims cannot be based on opinion and must be based on factual misstatements. In California, courts use the terms fraud and fraud interchangeably. Civil Code 1709 states “Whoever deliberately deceives another person with the intention of persuading him to change his position for the loss or risk, is responsible for the loss he suffers.” Generally to establish a fraudulent claim, a person must show that there is (1) a misrepresentation; (2) the defendant knows that the statement is false and intends for the plaintiff to rely on the statement; (4) the plaintiff simply relies on representation and (5) the plaintiff suffers losses as a result.
In the business world, the old adage-buyer beware–most of it still holds true. Opinions usually cannot form the basis of a fraud lawsuit. Fraud cases must be based on a misrepresentation of facts. An opinion expresses the maker’s belief without certainty, about the existence of facts, or the maker’s judgment about the quality or value of a product or service. Most of the sales talk is opinion. “German technique is the best in the world.” “There’s nothing more reliable than our telecopier repair service.” “There’s no dry cleaner in town that does a better job on stubborn stains.” All of these statements are opinions.
There are very important exceptions. Opinions can form the basis for fraudulent claims when the informant considers himself or herself to have special qualifications. If someone claims to be an expert or has special knowledge, then his opinion can become the basis for a fraud claim, although it cannot be the basis for a lawsuit if it is stated by a person who is not an expert and does not have special knowledge. .
This situation is not uncommon in a business context. If someone claims to be an expert on the authenticity and value of Picasso’s art, his or her representation of the value of a work of art or a collection can be acted upon, even if it would be considered sales talk or opinion if made. by someone who is not a Picasso expert.
In a case handled by the author, an individual claiming to be an expert on the popular surrealist artist sold several copies of the artist’s work to customers. Experts say that all the pieces are a good investment. Even though the pieces were copies, they had value because only a limited number of copies were made. Later, the expert offered to purchase a piece in partnership with the customer. The expert tells his customer that he thinks buying these items for $300,000.00–$150,000.00 each– makes sense because the items will continue to be valued. The expert tells the customer that he thinks the item could sell for today for about $400,000.00. When he made the representation, the expert knew he couldn’t sell the item for $400,000.00. He also knows that he can buy the item for $150,000.00.
The customer found out about the misrepresentation and sued the expert. The expert tried to avoid the lawsuit by submitting a defense called demurrer which stated that while the facts alleged in the customer’s complaint may be true, it is not sufficient for the customer to make a claim because an opinion cannot be the basis for fraudulent action. . The court dismissed the objection and allowed a complaint. The court held that because the expert considered himself to be specially qualified to judge the work of certain artists, his opinion could form the basis of a complaint.
Consumers and businesses deal with sales talk every day. Buyer beware is generally the rule. But when one party has, or presumes to have, superior knowledge or special information about the subject matter of the representation, and the other party can reasonably rely on that superior knowledge or special information, the representation is made by the knowledgeable party. or the information, although it could be considered a statement of opinion if made by another person, could form the basis of a fraudulent claim if it is not true.
