Tuesday, July 2, 2013

Be Careful, Lest You Commit Fraud

In keeping with the changes instituted by Supreme Court of California regarding the fraud evidence rule, customers now have the right to contest the validity of a business contract if the terms laid out do not match what was initially discussed between the contracting parties. Companies who want to set up shop in California must therefore be more mindful when giving out promises verbally, lest they be charged with fraud and/or breach of contract. Any form of verbal communication should ideally be recorded, and a transcript or a written summary be supplied to the contracting parties.

Under the new law, businesses must also be more careful when conducting everyday deals and transactions since anything they say can be used against them. Business fraud can be invoked against a company in a number of ways, most commonly through misrepresentation. Misrepresentation is said to be intentional if it can be proved that the accused committed a blatant lie, and negligent if committed by accident.

In any case, the penalty for business fraud can be relatively minor (such as a simple fine), depending on the circumstances. Luckily, victims of business fraud have the option to file a class action lawsuit, which hinges on the principle that the more people who accuse a company of the same crime, the heavier the punishment will be. With the recent modification to the fraud evidence rule in California, consumers now have more tools at their disposal against fraud.


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