Fraud and Misrepresentation in Business: Ohio Legal Guide
Business in Ohio thrives on trust and fair dealing. When that trust is broken through deception or negligence, the law provides avenues for "Righting Wrongs." Understanding the nuances of fraud and misrepresentation is essential for any business owner or individual who has suffered a financial loss due to the actions of another.
Here are the primary claims recognized under Ohio law regarding business deception and negligence.
1. Actual Fraud
Actual fraud involves intentional deception. It is more than just a mistake; it is a purposeful attempt to mislead someone to their detriment.
Key Elements:
● A representation (or concealment where there is a duty to disclose) of fact.
● The representation is material to the transaction.
● Made falsely, with knowledge of its falsity, or with utter disregard/recklessness as to its truth.
● Intent to mislead another into relying on the representation.
● Justifiable reliance by the victim.
● Injury proximately caused by that reliance.
Gaines v. Preterm-Cleveland, Inc., 33 Ohio St.3d 54 (1987).
2. Constructive Fraud
Unlike actual fraud, constructive fraud doesn't require "moral guilt" or a specific intent to deceive. It arises when someone breaches a legal or equitable duty (often a fiduciary duty) in a way that the law deems fraudulent because it violates a confidence or injures public interests.
Key Elements:
● A breach of a legal or equitable duty.
● Conduct that has a tendency to deceive others or violate a private/public confidence.
● No requirement to prove an actual "intent to deceive."
Perlberg v. Perlberg, 18 Ohio St.2d 55 (1969).
3. Negligent Misrepresentation
You can be held liable in Ohio even if you didn't intend to lie. Negligent misrepresentation occurs when a professional or businessperson provides false information because they failed to exercise reasonable care in verifying the facts.
Key Elements:
● Supplying false information in the course of business or a transaction where you have a financial interest.
● The information is intended for the guidance of others in their business transactions.
● The victim justifiably relies on that information.
● The person supplying the information failed to exercise reasonable care or competence.
● Pecuniary (financial) loss resulted.
Delman v. Cleveland Heights, 41 Ohio St.3d 1 (1989).
4. Negligent Hiring and Supervision
Businesses have a duty to ensure their employees are competent and do not pose a risk to others. If a company hires or fails to supervise an employee who then commits fraud or causes injury, the company itself can be held directly liable.
Key Elements:
● The existence of an employment relationship.
● The employee's incompetence.
● The employer's actual or constructive knowledge of that incompetence.
● The employee's act or omission caused the plaintiff's injuries.
● The employer's negligence in hiring or retaining the employee was the proximate cause of the injury.
Stephens v. A-Able Rents Co., 101 Ohio App.3d 20 (1995).
Protecting Your Business and Your Future
Business disputes involving fraud and misrepresentation are complex and fact-intensive. They require a deep dive into records, communications, and professional standards.
At Braden Blumenstiel Legal Advocates Group, LLC, we are dedicated to protecting families and businesses from the fallout of deceptive practices. We believe in high-level advocacy that holds wrongdoers accountable for their reckless disregard or intentional misconduct.
If your business has been affected by fraud or negligence, don't wait. Contact us at 614-508-1677 or 1-888-343-9796 or fill out our online form today.
Righting Wrongs and Protecting Futures
