PHAM & CLOVES, PLLC

Contract & Business Fraud And Causes of Actions

Texas recognizes three types of fraud causes of action, namely, common law fraud, fraud by nondisclosure, and statutory fraud. Common law fraud pertains to 2 different subcategories, (1) “simple fraud” (sometimes referred to as “fraudulent misrepresentation,” and (2) fraudulent inducement. Simple fraud, or fraudulent misrepresentation, occurs when the fraudulent party knowingly or recklessly misrepresented material facts to other party at the onset of the contract or the business relationship. Under fraudulent inducement, the fraudulent party made false representation knowingly or recklessly induced the other party to enter into the contractual or business relationship. Because the elements of the two causes of action mentioned are the same, the plaintiff can simply make a claim of “common law fraud.”

Texas law also recognizes “fraud by nondisclosure.”  Fraud by nondisclosure is an omission or concealment of material fact in which the parties have a duty to the injured party. “Material fact” are information in which, if known, the injured party would not have entered into the business relationship. Texas courts treat the nondisclosure of material information the same as intentional misrepresentation of material fact. Although similar, the elements in which the plaintiff has to prove are different from common law fraud; and thus, fraud by nondisclosure has to be pleaded separately.

Finally, Texas law also allows “statutory fraud” claims.  Statutory frauds are violations under the Texas Business and Commerce Code with respect to transactions in real estate, including but not exclusive to contract in land, mineral rights, leasehold, improvements, and loans for the purchase of real estate, and in stock transactions. Violation of the Texas Business and Commerce Code is “per se.”  Consequently, if the defendant violates the statute, the plaintiff does not need to prove that the defendant knowingly, or recklessly, misrepresented material fact, or that intentionally make false representation intended to induce the other party.

In preparing to file an original petition against the wrongful party, the Houston Business Litigation Lawyers at Veritas Legal Group, P.C. will consider other related causes of actions, including but not exclusive to breach of contract, breach of fiduciary duty, embezzlement, negligence misrepresentation, gross negligence, and negligence. Depending on the fact, one or more of these causes of action may be pleaded in conjunction with the fraud claims. You are invited to contact and consult with your Houston Business Fraud Lawyers and your Houston Contract Fraud Attorneys at Veritas Legal Group, P.C. if you feel that you have been a victim of a fraud scheme or if you have been accused in a frivolous claim. The Houston Contract Fraud Lawyers and the Houston Business Fraud Attorneys at Veritas Legal Group, P.C. will assist you in identifying your causes action or defenses to these claims.  Your right to file claims arising out of a fraud is limited to 2 years from the date of occurrence or the date of discovery (such as hidden defects in a home).  Our Houston Real Estate Fraud Litigation Attorneys and our Houston Commercial Fraud Lawyers can be reached at 713-492-0337.