When business professionals provide poor advice, information, or services, it can greatly impact their clients. Learn how you can financially protect yourself if you are taken to court for misrepresentation, even if you’re not at fault.
As a business owner, you can do everything right. Incorporate your venture, file your taxes on time, and provide your clients with exceptional services. And yet, the unexpected can still happen.
It’s impossible to account for accidents or misunderstandings, including claims that you misrepresented your services.
In this article, APOLLO will cover example claims scenarios of misrepresentation, as well as ways you can protect your business from this type of lawsuit.
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Suing for Misrepresentation: Claims Examples
If you’re a client who feels misled by a professional you’ve hired, can you sue their company for misrepresentation of services? In many cases, the answer is yes.
Business professionals who are viewed as experts in their field are bound to provide services to their clients to the best of their abilities. So, when a professional provides false statements, false promises, or misinformation that leads to personal injury or other damages, they can be sued for misrepresentation.
Below are the three types of misrepresentation that can lead to a breach of contract or potential suit.
1. Innocent Misrepresentation
Innocent misrepresentation is when a professional accidentally provides incorrect advice or information to a client. The statement was made in error and was not done with mal intent.
For example, say a copywriter helps a client draft a press release for their business. The client mistakenly believes the copywriter will review the final draft before it’s published based on a statement the copywriter made during an initial conversation about the project. As this is not the case, the company publishes an unfinished press release with inaccurate information, damaging its reputation.
In the above scenario, the client could sue the copywriter to award damages.
2. Negligent Misrepresentation
When a professional provides negligent misrepresentation, they are not deliberately lying to their client. However, they are also not performing their due diligence as an expert in their field.
For example, if a data analyst gives a client bad advice based on trends from a previous year, this could be considered negligent misrepresentation. While the poor information is not a deliberate lie, the analyst has a duty to protect the interests of her client and should have been more diligent in reviewing the data from the current year.
The client would be within their right to sue the data analyst for damages.
3. Fraudulent Misrepresentation
The final type of misrepresentation is known as fraudulent. This is when a business professional intentionally lies to their client, typically for their own personal gain.
For example, say an accountant deliberately misleads a potential client into believing that he can get her a large tax refund if she files her taxes through his firm. Although the accountant has no knowledge of what the client’s return will be, he still makes this statement in order to secure her business. After her taxes are filed, the client discovers that she actually owes $2,000.
Since the accountant’s representation was false, the client could sue to recover damages.
How Small Business Insurance Can Protect You
As a business professional, clients view you as an expert in your field. For this reason, it’s important for the services or products that you provide to be up to a certain standard. Of course, everyone makes mistakes, which is why professional liability insurance is an invaluable investment for any business.
It can help protect you in the event that you make an error, unintentionally omit important information, or even if you haven’t done anything wrong.
Start your online application with APOLLO now, and you could be insured in the next 15 minutes.
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