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Normally, an element of the tort of fraudulent misrepresentation, the tort of negligent misrepresentation, statutory securities fraud offenses, and a criminal fraud offense based upon a misrepresentation (e.g. perjury) is that the misrepresentation was "material."

One fairly common circumstance in which tort and fraud claims based upon misrepresentations come up is when information is provided on a form or affidavit in connection with a business transaction which contains many required response items, only some of which are material to the parties.

Suppose that the form or affidavit that is completed is true in all respects material to the parties to the transaction (e.g. the representation that the person signing a document has the authority to do so is true), but the form or affidavit contains information in support of that true fact (e.g. detailed information concerning the time and place of execution, and the language of corporate bylaws providing that authority) that are completely and intentionally fabricated.

Has any criminal offense been committed?

Does anyone have a valid basis to bring a tort claim?

Would the conclusion be different if the representation was warranted to be true in a contractual agreement?

If there is no enforceable violation of any law in this situation, is an intentional lie to overcome an artificial bureaucratic hurdle legal? If not, why not?

  • Is the artificial bureaucratic hurdle created by one of the parties to the business transaction, or by the regulator? – Greendrake Oct 30 '18 at 1:38
  • @Greendrake It could be either, but I am not envisioning a transactions with a regulator itself even if it is mandated by a regulator. – ohwilleke Oct 30 '18 at 2:03
  • I think this question is too broad to answer cross-jurisdictionally, because it depends too much on the differences between the many different fraud statutes, and the reason for the deception. Taking your example, to have overcome ‘bureaucratic hurdles’ is to gain an advantage, and with intentional deceit, it may be fraud. But in the UK, for example, you would need to show that the advantage amounts to a ‘gain ... in money or other property’: s 5 of the Fraud Act 2006. – sjy Oct 30 '18 at 2:04
  • Fair point. Added a jurisdiction tag. – ohwilleke Oct 30 '18 at 2:06
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Has any criminal offense been committed?

Possibly. A person can be guilty of a crime even where all of their actions are factually legal if it was their intention to commit a crime.

If the person provided the supporting information about their authority to sign because they believed that they didn't have it (even though they did) then this is probably fraud.

The only case similar to this that I am aware of is where a driver for an illegal chop shop was instructed to take a car for valuation that they believed was stolen. In fact, the car was legitimately owned by the owner of the chop shop. The person was convicted because they had the intention and carried through the actions to commit the crime of receiving stolen property even though the "crime" was factually impossible. I can see no reason why the same principle would not apply to fraud.

Does anyone have a valid basis to bring a tort claim?

I can't see one. As you say, the untruths are not material and I can't see how damage can flow from them.

Would the conclusion be different if the representation was warranted to be true in a contractual agreement?

It would depend on the terms of the the contract.

Clearly, it would be a breach and as such would entitle the wronged party to 1) damages or 2) to take whatever action the contract allowed for the breach. The obvious question for 1) is: what damages? For 2), you say its a warranty so a breach doesn't justify termination, however, its possible that the contract says some specific action can be taken in response.

If there is no enforceable violation of any law in this situation, is an intentional lie to overcome an artificial bureaucratic hurdle legal? If not, why not?

There is no legal obligation on anyone to tell the truth unless:

  • you are under oath,
  • someone may suffer harm from the falsehood ("Yes, the bridge is safe"),
  • it is in pursuit of a crime, or
  • there is a statutory prohibition (for example, lying on an immigration form).
  • I'm not sure that either lying under oath or lying on an immigration form where it is statutorily prohibited would be crimes if the lie was immaterial. For example, I'm not sure there would be a violation of immigration law if you intentionally said on the form that you were born in Moscow, but were actually born ten miles away from there in a nearby town in the same country. The attempt to commit a crime even though it actually isn't one is an interesting example. – ohwilleke Oct 30 '18 at 5:04
  • @ohwilleke the lie you describe may not bring criminal sanctions but it is probably enough to have you refused entry. Of course, Moscow is big enough that ten miles away is still Moscow. – Dale M Oct 30 '18 at 7:46
  • Ten miles away from the boundary, not the center. – ohwilleke Oct 30 '18 at 7:48
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Imagine I buy an expensive picture. The picture is very valuable if it is genuine, and worthless if not genuine. And it is very bad for the price if I cannot prove it is genuine.

If the picture is indeed genuine, but you could only provide faked evidence for it, then it might be worth a lot less because of that. There would be good reason for the buyer to be very unhappy with this and call it 'fraud'.

Of course, in this situation the falsehoods are not immaterial.

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