When a business deal goes bad, it’s not always just bad luck. Sometimes, it’s because one side was misled. In South Carolina, misrepresentation in business can give you grounds to sue. But not every lie or mistake counts. You need to know what qualifies, what you can do about it, and how to protect yourself moving forward.

What Is Misrepresentation in Business?

Misrepresentation happens when one party gives false information that the other side relies on to make a business decision. This can be a lie, an exaggeration, or even something that’s technically true but meant to trick. In business, this often comes up in contracts, sales talks, or investment pitches.

There are three main types:

• Fraudulent Misrepresentation – Someone lies on purpose to get you to agree to a deal.
• Negligent Misrepresentation – False info is shared because the person didn’t check the facts.
• Innocent Misrepresentation – A false statement is made, but the person believed it was true.

Key Elements of Misrepresentation

For a misrepresentation claim to stick, these things must usually be true:

1. A false statement was made.
2. It was about a fact, not just an opinion.
3. The statement was meant to get you to act.
4. You relied on it when making the deal.
5. That reliance caused you harm.

In South Carolina, courts take a close look at whether the harmed party was justified in relying on the statement.

Common Situations Where Misrepresentation Occurs

Misrepresentation can pop up in all sorts of business settings. Common examples include:

• Business sales: A seller hides debt, fake revenue, or pending lawsuits.
• Real estate deals: A property is said to be in good shape, but there are hidden defects or code issues.
• Investment offers: Promises of “guaranteed returns” turn out to be hype or lies.
• Partnerships and hires: Someone lies about their credentials or assets.

These issues often show up during contract talks, financial statements, or marketing materials.

Legal Grounds for Taking Action

If misrepresentation led to financial loss, you may have legal grounds to sue.

In South Carolina, fraudulent and negligent misrepresentation are both valid claims under state law. The courts will look at whether the statement was false, if the person knew (or should have known) it was false, and whether you reasonably relied on it.

Certain industries, like insurance and real estate, also have their own specific rules and penalties for misrepresentation.

Remedies Available

If you prove your case, the court can award:

• Rescission: Cancels the deal. Both sides give back what they got.
• Damages: Covers your financial loss.
• Punitive damages: Extra money to punish extreme dishonesty, only available in fraud cases.

The type of misrepresentation (fraudulent, negligent, or innocent) affects which remedies you can get.

Defenses Against a Misrepresentation Claim

If someone accuses you of misrepresentation, you still have options. Common defenses include:

• The statement was true.
• The other party didn’t rely on it.
• The statement was an opinion or guess, not fact.
• They knew the truth but went ahead anyway.

Courts also look at whether the injured party did their own due diligence. If they skipped that step, the case might not hold up.

Steps to Take If You Suspect Misrepresentation

Think you were misled? Here’s what to do:

1. Write down what happened. Keep a timeline with names, dates, and what was said.
2. Save everything, contracts, emails, texts, voicemails.
3. Look for proof that shows the other side knew the info was false.
4. Talk to a business lawyer, the sooner, the better.
5. Act fast. South Carolina has time limits for filing these claims.
   

The longer you wait, the harder it gets to recover your losses.

How to Prevent Misrepresentation in Your Own Deals

You can’t control what others say, but you can protect yourself. Here’s how:

• Double-check facts before closing a deal.
• Put everything in writing. Don’t trust handshakes or vague promises.
• Ask clear questions and get clear answers.
• Use clear, plain-language contracts.
• Get help from professionals, CPAs, appraisers, inspectors, when the deal involves big money.

When in doubt, slow down. A rushed deal is a risky deal.

Misrepresentation can wreck a business deal. But South Carolina law gives you options. Whether you’re protecting yourself or holding someone accountable, knowing the rules puts you in a stronger spot.

Don’t wait until you’re stuck in a mess. Learn the signs. Ask the right questions. And get the right people on your side from the start.

Disclaimer: This blog is for general informational purposes only and does not constitute legal advice. Laws can vary by state and specific circumstances. For advice on your particular situation, consult a licensed attorney in South Carolina.

Common Situations Where Misrepresentation Occurs