HOUSTON BUSINESS LITIGATION ATTORNEYS
BUSINESS AND CONTRACT FRAUDS
Trust among business partners is essential in a successful business venture. Trust allows the partners to properly assess risk and develop a business model that enable growth; and yet, trust also allows some partners to take advantage over others at the onset of the partnership, in conducting their business relationship, and also in daily business activities. One or more business partners often times have a business advantage over the injured party, such as a majority shareholder over a minority shareholder, and will use that advantage in defrauding the minority shareholder in profits and opportunities. When this occurs, the business will likely suffer as will the relationship between the partners. The injured party must take necessary steps to prosecute against the defrauding party, limit their liability to others, such as shareholders and customers, as well as protect the business from further harm.
At PHAM CLOVES, PLLC, the experienced Houston Business Fraud Attorneys and the Houston Commercial Fraud Lawyers will be able to assist you in handling business fraud claims, whether from the aggrieved partners’ position or if someone has been wrongfully accused of business fraud. If you feel you have been the victim of business fraud or have been accused of committing fraud, you are invited to contact the Houston Corporate Fraud Lawyers and the West Houston Contract Fraud Attorneys at PHAM CLOVES, PLLC.. at 713-492-0337 for a consultation to discuss your legal rights and obligations.
What Constitutes a Fraud?
Black’s Law Dictionary defined fraud as, “A knowing misrepresentation of the truth or concealment of a material fact to induce another to act to his or her detriment.” The definition seems to suggest that fraud occurs at the onset of the business or contractual relationship. However, fraud can occur at various stages of a business transaction. Although some fraudulent transactions may occur from the onset, in many cases, the parties have the best intention at the engagement of their business relationship. However, throughout the course of that relationship, things may change that cause one party to take advantage over another, such as when the business hits a downturn or the wrongful party allow personal financial problems to affect the business (such as embezzling corporate funds for personal debts).
Fraud oftentimes occurs in the context of a business relationship, such as a partnership, company memberships, or in a corporate setting by executives and board members. Business and contract frauds can have many faces. In Texas, a party can file suit for fraud when the wrongful party obtains a contract by misrepresentation of material fact; embezzling corporate funds and assets, commit corporate theft, perpetrated in an accounting fraud, misrepresenting of material fact by nondisclosure, inducing a party to enter into a contract or a business relationship through false misrepresentation of material fact, and acted in ways that constitutes investment fraud. This list is not all inclusive of the subcategories of fraudulent behavior and should not be used as a legal filter in determining if you may have a claim against a business partner, or someone who you feel may have defrauded you. If you feel that you have been a victim of a fraudulent transaction, you should contact the Houston Business Fraud Lawyers and the Southwest Houston Corporate Fraud Attorneys immediately for assistance. Our experienced Houston Contract Fraud Attorneys will assist you in identifying possible fraudulent causes of action and prevent further damages to your business, personal liability, and obtain remedies to rectify your injury.
Fraud And Related Causes of Actions
Under Texas law, there are three types of causes of action in which a party may plead in its suit arising out of fraud. First, Texas recognizes a cause of action for “common law fraud.” Common law fraud arises out of case law by precedent holdings by Texas courts and allows a plaintiff to make a claim based on (1) “simple fraud” (sometimes referred to as “fraudulent misrepresentation,” and (2) fraudulent inducement. Simple fraud, or fraudulent misrepresentation, may occur when one party misrepresent a material fact in which the other party relied on in entering into the contract or the business relationship. Under fraudulent inducement, the fraudulent party knowingly made false representation intended to induce the other party to enter into the contractual or business relationship. Although similar, these are two different causes of actions that have the same elements. Because the elements of the two causes of action mentioned are the same, the plaintiff can simply make a claim of “common law fraud.” If you feel that you or your company have been a victim of a business or contractual fraud, please contact the Houston Business Fraud Lawyers and the Southwest Houston Business Fraud Attorneys at PHAM CLOVES, PLLC. Time is of essence, depending on the fact of your case.
The second type of fraud that Texas law recognizes is “fraud by nondisclosure,” an omission or concealment to material fact. Under this theory, the parties have a duty to disclose material information to each other. “Material fact” are information in which, if known, the injured party would not have entered into the business relationship. The nondisclosure of material information is as fraudulent as the intentional misrepresentation of material fact. Although similar, the elements in which the plaintiff has to prove in a fraud by nondisclosure causes of action are different from common law fraud; and thus, the two causes of actions have to be plead separately.
The third type of fraud that is recognized in the state of Texas is “statutory fraud.” Statutory frauds are frauds that are explicitly prohibited under the Texas Business and Commerce code and encompass fraudulent transactions in real estate (contract in land, mineral rights, leasehold, improvements, and loans for the purchase of real estate) and in stock transactions. The elements for statutory fraud are almost exactly the same as common law fraud with the exception is that the violation is “per se.” That is, because the violation is a statute, the plaintiff does not need to prove that the defendant knowingly, or recklessly, misrepresented material fact, or that intentionally make false representation intended to induce the other party.
Other related causes on actions under fraud include breach of contract, breach of fiduciary duty, embezzlement, negligence misrepresentation, gross negligence, and negligence causes of action. Depending on the fact, one or more of these causes of action may be pleaded in conjunction with the fraud claims. Please consult with your Houston Business Fraud Lawyers and your Houston Contract Fraud Attorneys at PHAM CLOVES, PLLC if you feel that you have been a victim of a fraud scheme or if you have been accused in a frivolous claim. The Houston Contract Fraud Lawyers and the Houston Commercial Fraud Attorneys at PHAM CLOVES, PLLC will assist you in identifying your causes action or defenses to these claims.
DISCLAIMER
Causes of actions arising out of fraud vary depending on the fact and the contractual or business relationship resulting from the fraud. There may be one or more other related causes of action in which the injured party may make a claim. At the same time, there may be limitations to the claims and defenses to each allegation. Only after a careful consultation with one of our Houston Commercial Fraud Attorneys and our Houston Contract Fraud Lawyers should you take a specific course of action. You should NOT rely on the information on of this web site in replacing a personal consultation with an experienced Houston Business Litigation Lawyers and the West Houston Commercial Litigation Attorneys at PHAM CLOVES, PLLC. There may be legal issues in which you may not be aware that can change your rights and obligations in prosecuting or defending fraud claim. You are invited to contact our Houston Business Fraud Attorneys and our Houston Contract Fraud Lawyers at PHAM CLOVES, PLLC for a personal consultation. Our attorneys can be reached at 713-492-0337 or complete our Contact Form.
Serving Clients in Houston, West Houston, Southwest Houston, Sugar Land, Katy, Copperfield, Memorial, Spring, Northwest Houston, Northchase, Spring Cypress, Champion Forest, The Woodlands, Kingwood, Humble, Lake Houston, Midtown, Memorial, West Oaks, Royal Oaks, Missouri City, Richmond, Pear Land, Clear Lake, League City, Westchase Business District, Harris County, and Galveston County. In addition, our Houston business attorneys also have the language ability to communicate and to translate for clients who speak Vietnamese, Tagalog, Hindi, and in Urdu.