Law Society of Ontario (LSO) Paralegal Practice Exam

What distinguishes fraudulent misrepresentation from negligent misrepresentation?

1. The representation was unintentional

2. The representation was made by an agent

3. The representation was made knowingly

4. The representation was irrelevant

The correct answer is: The representation was made knowingly

Fraudulent misrepresentation is characterized by the intentional deceit of the person making the representation. For a misrepresentation to be classified as fraudulent, it must be made knowingly, with the intent to deceive the other party, who relies on that information to their detriment. This means that the person who makes the statement is aware that it is false or does not honestly believe it to be true at the time of making it. In contrast, negligent misrepresentation occurs when the representation is made without reasonable grounds for believing it to be true. This means there is a lack of intent to deceive, but the person making the statement fails to exercise the care that the circumstances require. The key distinction lies in the knowledge and intent behind the statement: fraudulent misrepresentation requires intentional deceit, while negligent misrepresentation arises from carelessness. Other options do not accurately capture the essence of the distinction. For instance, unintentional misrepresentation (the suggestion of unintentionality) would relate to negligent misrepresentation rather than fraudulent. The involvement of an agent is irrelevant to the crux of the distinction, as both types may involve agents acting on behalf of others. Lastly, the irrelevance of the representation does not pertain to the differentiation between these two legal concepts, as