Fraud in contract can lead to lawsuit

As reported in USA Today, lawsuit filings involving a professional football team’s s co-offensive coordinators of last season are in full force. In these cases, the plaintiff-coordinators allege that the athletic department and other specific individuals committed fraud in persuading the plaintiffs to sign a new contract.

Fraud in the inducement is an old theory in contract law. As the term suggests, one party induces another party to sign a contract, after using misrepresentation or fraud in some manner.

Football season lawsuit

The plaintiffs had originally signed an 18–month contract at the behest of the school, that ran until June 2017. However, the school allegedly never signed it, to the surprise of the plaintiffs who performed for several months under that agreement. The school allegedly subsequently presented the plaintiffs with a new contract. The lawsuits claim the school pressured them to sign the new contract. The new contract injured them in that it shortened their tenures to end in February 2017 rather than June 2017.

The pressure on the plaintiffs included the threat of firing and immediate loss of salary and benefit if not signed forthrightly. The pressure also included the allegation that the parties never executed the old contract since the school never signed it. Two days after signing the new contract, which shortened the plaintiffs’ tenure by four months, the school fired the plaintiffs nonetheless.

Fraudulent inducement elements

According to the Huffington Post fraudulent inducement may arise under the following conditions:

  • One party makes significant and influential statements that are untrue
  • That party’s purpose in making the statements is to cause the other party to rely on such statements
  • The other party believes the false statements to be true and relies on them
  • The other party suffers damages as a result

Fraudulent inducement to sign a contract then, typically happens prior to the signing, and may also seek monetary damages.

 

In proving a case of fraudulent inducement, the football coordinators may have to also prove that the persuasive statements were factual, even if false, and not opinion statements. They should also show that their reliance on the school’s statements was reasonable or justified.

 

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