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Texas Fraud and Fraudulent Inducement

© 2018 Mark Courtois

The elements of fraud are:(1) a material representation was made; (2) the representation was false; (3) when the representation was made, the speaker knew it was false or made it recklessly without any knowledge of the truth and as a positive assertion; (4) the speaker made the representation with the intent that the other party should act upon it; (5) the party acted in reliance on the representation; and (6) the party thereby suffered injury.  Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323, 337 (Tex. 2011); Aquaplex, Inc. v. Rancho la Valencia, Inc., 297 S.W.3d 768, 774 (Tex. 2009).

Fraudulent inducement is a species of common-law fraud and arises when the misrepresentation is made to induce another to enter into a contract.  Fraudulent inducement is actionable when the msirepresentation is a false promise of future performance made with an intent not to perform.    Because fraudulent inducement arises only in the context of a contrat, the existence of a contract is usually an essential element of the claim.   But when a defendant fails to obtain fact findings that the contract was unenforceable, the contract elements found in the fraudulent inducement claim itself are sufficent to support the claim.  Archer v. Anderson, No. 16-0256, slip op. at 21 (Tex. June 22, 2018), available at www.txcourts.gov/supreme/orders-opinions/2018/june/june-22-2018/.

There is a four statute of limitation for fraud claims. Tex. Civ. Prac. & Rem Code. § 16.004(a)(4).   But Texas' discovery rule provides that a cause of action accrues and statute of limitations begins to run when facts come into existence that authorize a claimant to seek a judicial remedy.  Hooks v. Samson Lonestar, L.P.,  2015 Tex. LEXIS 56, P*8 (Tex. 2014).  Accordingly, fraud claims must be brought within four years of when the fraud is discovered or in the exercise of reasonable diligence should have been discovered. Id.