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Question 1

What is Fraudulent Misrepresentation?

Answer 1

A false, material statement made knowingly or recklessly, intended to induce reliance, which causes justifiable reliance and economic damages.

Question 2

What is Material Misrepresentation?

Answer 2

A false assertion that would influence a reasonable person’s decision-making in a transaction.

Question 3

What does Scienter refer to?

Answer 3

The defendant’s knowledge that a statement is false or made with reckless disregard of its truth.

Question 4

What is Recklessness?

Answer 4

Conscious disregard of a known risk or assertion made without basis.

Question 5

What is Reliance in legal terms?

Answer 5

The plaintiff’s action or inaction based on believing the false representation.

Question 6

What is Justifiable Reliance?

Answer 6

Plaintiff’s belief in the misrepresentation must be reasonable under the circumstances.

Question 7

What are Benefit of the Bargain Damages?

Answer 7

The difference between what was promised and what was actually received.

Question 8

What are Out-of-Pocket Damages?

Answer 8

The actual economic loss suffered by the plaintiff.

Question 9

What is Puffery?

Answer 9

Exaggerated, subjective statements that are not actionable (e.g., “best burger in town”).

Question 10

What is Opinion Misrepresentation?

Answer 10

Usually not actionable unless made by an expert or fiduciary, or implies false facts.

Question 11

What is Intentional Interference with Contract?

Answer 11

A third party intentionally disrupts a valid contractual relationship between others.

Question 12

What are Prospective Economic Relations?

Answer 12

Reasonable economic expectations not yet solidified into a contract.

Question 13

What is Knowledge of Relationship in interference claims?

Answer 13

Defendant must know about the contract or expectancy they are interfering with.

Question 14

What is Justification in the context of interference claims?

Answer 14

A defense to interference claims—includes truthful advice, public policy interests, or fair competition.

Question 15

What is Tortious Breach of Covenant of Good Faith and Fair Dealing?

Answer 15

Bad faith actions by a contracting party to deprive the other of contract benefits, often recognized in insurance disputes.

Question 16

What is Independent Legal Wrong?

Answer 16

For newer formulations of interference torts, liability arises only where defendant commits a separate legal wrong.

Question 17

What is an At-Will Contract?

Answer 17

Agreements that either party can terminate at any time; usually subject to less tort protection.

Question 18

What are Reinstatement (Second) & (Third) in tort law?

Answer 18

Legal summaries of tort law that courts may adopt—Third focuses on narrower, more specific standards for interference torts.

Question 19

What are the five elements of fraudulent misrepresentation?

Answer 19

Misrepresentation, scienter, intent to induce reliance, justifiable reliance, and damages.

Question 20

What makes a misrepresentation ‘material’?

Answer 20

If a reasonable person would consider it important when making a decision or the speaker knows it’s important to the listener.

Question 21

When can an opinion be a misrepresentation?

Answer 21

When it’s made by an expert, fiduciary, or implies false facts not known to the listener.

Question 22

What is puffery and why is it not actionable?

Answer 22

Exaggerated or subjective claims (e.g., “best in the world”) that no reasonable person would rely upon.

Question 23

What is scienter in the context of fraud?

Answer 23

Knowledge that the statement is false or reckless disregard for the truth.

Question 24

How is reliance evaluated?

Answer 24

Plaintiff must have acted on the misrepresentation, and their reliance must be justified under the circumstances.

Question 25

What types of damages are available for fraudulent misrepresentation?

Answer 25

Benefit of the bargain damages, out-of-pocket losses, consequential damages, and sometimes punitive damages.

Question 26

What is the key difference between intentional interference with contract and with prospective economic relations?

Answer 26

The former involves a valid contract; the latter involves economic expectancies short of a contract.

Question 27

What are the elements of both interference torts?

Answer 27

(1) Valid contract or expectancy, (2) knowledge of it, (3) intent to interfere, (4) causation, (5) damages.

Question 28

When is interference justified?

Answer 28

When it involves truth-telling, legal rights, fair competition, or actions in good faith.

Question 29

How did the Restatement Third change interference torts?

Answer 29

It narrows liability to cases involving wrongful conduct, like acting with malice or committing an independent legal wrong.

Question 30

How do courts treat at-will economic relationships under interference law?

Answer 30

They are protected but with broader justification defenses, especially when fair competition is involved.

Question 31

What is tortious breach of the covenant of good faith and fair dealing?

Answer 31

A bad faith action by a contracting party to frustrate the agreed-upon benefits; usually applied in insurance contexts.

Question 32

When can a breach of the covenant lead to tort liability instead of just contract liability?

Answer 32

Typically only in insurance contracts or egregious cases where malice and significant bad faith are present.

Question 33

What is the difference between ‘benefit of the bargain’ and ‘out-of-pocket’ damages?

Answer 33

Benefit of the bargain measures expected profit; out-of-pocket measures actual loss.

Question 34

What happened in Jacobson v. Hofgard and how does it relate to fraud?

Answer 34

Sellers misled buyers with technically true statements and omissions, which the court held could constitute fraudulent misrepresentation.

Question 35

Why might reliance be unjustifiable even if the statement was false?

Answer 35

If the falsehood was obvious or easily verifiable, like reading an odometer that contradicts the seller’s statement.

Question 36

How does intent play a role in interference torts?

Answer 36

Defendant must have acted purposefully or known with substantial certainty that their actions would interfere.

Question 37

Can a joke be fraudulent misrepresentation?

Answer 37

No, unless the defendant intended the statement to be relied on seriously.

Question 38

When does the covenant of good faith become a tort rather than a contract breach?

Answer 38

In limited cases—most often insurance bad faith—where economic leverage and bad faith denial are involved.