PJC Business

C ONTRACTS

PJC 101.31

PJC 101.31 Defenses—Instruction on Fraudulent Inducement Failure to comply by Don Davis is excused if Don Davis was fraudulently induced to enter into the same agreement. Fraudulent inducement to enter into an agreement occurs when— 1. a party makes a material misrepresentation, and 2. the misrepresentation is made with knowledge of its falsity or made recklessly without any knowledge of the truth and as a positive assertion, and 3. the misrepresentation is made with the intention to induce the other party, and 4. the other party [ justifiably ] relies on the misrepresentation and thereby enters into the agreement. “Misrepresenation” means— [Insert appropriate definitions from PJC 105.3A–105.3E.] COMMENT When to use. PJC 101.31 is appropriate to submit the affirmative defense of fraudulent inducement in response to a claim for breach of an agreement. A contract is subject to avoidance on the ground of fraudulent inducement. Williams v. Glash , 789 S.W.2d 261, 264 (Tex. 1990). The character of fraud necessary to vitiate a contract is some representation, trick, artifice, or device that prevents the coming into existence of any valid contract at all. Distributors Investment Co. v. Patton , 110 S.W.2d 47, 48 (Tex. Comm’n App. 1937), overruled in part by Dallas Farm Machin ery Co. v. Reaves , 307 S.W.2d 233 (Tex. 1957). Fraudulent inducement is an affirma tive defense to liability under a contract that the party asserting it must plead and prove. Texas Farmers Insurance Co. v. Murphy , 996 S.W.2d 873, 879–80 (Tex. 1999); Tex. R. Civ. P. 94. It may be possible for a contract’s terms to preclude a claim for fraudulent induce ment by a clear and specific disclaimer-of-reliance clause. Italian Cowboy Partners, Ltd. v. Prudential Insurance Co. of America , 341 S.W.3d 323, 332 (Tex. 2011) (citing Schlumberger Technology Corp. v. Swanson , 959 S.W.2d 171, 179 (Tex. 1997)); Bom bardier Aerospace Corp. v. SPEP Aircraft Holdings, LLC , 572 S.W.3d 213, 232 (Tex. 2019). However, a merger clause, or a clause that merely recites that the parties have not made any representations other than those contained within the written contract,

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