Gary accuses Helen, a broker with Investment Services, of fraudulently inducing him to invest in Junkbonds Inc., after the company's stock price declines in value. The reliance that gives rise to liability for fraud requires

Question

Gary accuses Helen, a broker with Investment Services, of fraudulently inducing him to invest in Junkbonds Inc., after the company's stock price declines in value. The reliance that gives rise to liability for fraud requires​

Quizplus · Accepted Answer

Liability for fraud requires misrepresentation of a fact knowing that it is false. In this case, if Helen made false statements or provided misleading information about Junkbonds Inc. with the intent to induce Gary to invest, it could give rise to liability for fraud. Reliance alone is not enough for fraud, as it must be based on a misrepresentation of a material fact. Puffery and seller's talk are not considered fraudulent misrepresentations.

Gary Accuses Helen, a Broker with Investment Services, of Fraudulently