Jack was earning $8 an hour and discovered after hours of research that he needed to earn at least $20 per hour so as to qualify for a purchase from Glendora BMW. Jack forged a pay stub indicating that he earned $20 an hour and presented it to the finance department at Glendora BMW. BMW sold Jack a car and he defaulted loan payment after six months. Glendora BMW has discovered that Jack used a forged pay stub and intends to charge him with fraudulent misrepresentation.
To determine if Jack acted in a way that amounted to fraudulent misrepresentation and also if Glendora BMW may be compensated for the resulting default in loan repayment.
For a case of fraudulent misrepresentation to hold in a court of law it must possess the elements of material misrepresentation, reckless disregard, intent to induce, reliance and damages.
This case has clear evidence of material misrepresentation because Jack knowingly delivered false information of his income which had a direct correlation to the contract. He misrepresented the fact that he earned $20 instead of $8 dollars an hour so as to be eligible for the purchase. This has an influence in the opinion of the company and is material to the contract.
The fact that Jack knowingly lied about his income qualifies as reckless disregard because he was aware that the statement was false. Besides it was technically possible for him to earn such a salary. This act was premeditated as Jack had taken his time to research on the qualification for the loan from BMW and then misrepresented material information without considering the fact that he might be unable to payback.
The fundamental criterion of intent to induce is present in this case because Jack misrepresented the facts for the reason of qualifying for the loan. Thus, Jack deliberately lied to BMW and influenced their decision of offering him a loan to buy a car. He knew that if he was truthful about his income he would not have been granted the purchase. Therefore, his misrepresentation changed the decision of the company.
The element of reliance is evident in this case because the Glendora BMW company relied on this information to make the final decision of selling a car on loan to Jack. The company could not have entered into a contract with Jack if he had disclosed the fact that he did not earn at least $20 an hour.
Finally, the case has the element of damages because it is provable that the intentional lies caused a degree of harm to Glendora BMW. The company suffered financial losses due to increase in bad debts caused by the actions of Jack. The company may be held liable for breaking regulations regarding lending which may lead to fines and penalties.
Since all the required criteria are met BMW could have a case that could hold in a court of law. The company need only present the documentary evidence, articulate and quantify the losses it sufferers.
The law of torts prescribes that for a case of fraudulent misrepresentation to hold in a court of law it must possess five elements. These are material misrepresentation, reckless disregard, intent to induce, reliance and damages. Each and every element must be proven individually and sufficiently argued for the plaintiff to be compensated.