PJC Business 2024

F RAUD AND N EGLIGENT M ISREPRESENTATION

PJC 105.4

PJC 105.4

Instruction on Common-Law Fraud—Failure to Disclose When There Is Duty to Disclose

Fraud occurs when— 1. a party fails to disclose a material fact within the knowledge of that party, and 2. the party knows that the other party is ignorant of the fact and does not have an equal opportunity to discover the truth, and 3. the party intends to induce the other party to take some action by failing to disclose the fact, and 4. the other party suffers injury as a result of acting without knowl edge of the undisclosed fact. COMMENT When to use. PJC 105.4 should accompany PJC 105.1 if the court finds that there is a duty to disclose. Source of instruction. PJC 105.4 is based on the elements of fraud by nondisclo sure set forth in Bombardier Aerospace Corp. v. SPEP Aircraft Holdings, LLC , 572 S.W.3d 213, 219–20 (Tex. 2019); Bradford v. Vento , 48 S.W.3d 749, 754–55 (Tex. 2001). Instruction 4 submits the reliance element of fraud. See Bombardier Aerospace Corp. , 572 S.W.3d at 219–20; Bradford , 48 S.W.3d at 754–55. Silence as misrepresentation. “As a general rule, a failure to disclose informa tion does not constitute fraud unless there is a duty to disclose the information.” Mer cedes-Benz USA, LLC v. Carduco, Inc. , 583 S.W.3d 553, 562 (Tex. 2019) (quoting Bradford , 48 S.W.3d at 755). “Whether such a duty exists is a question of law.” Car duco, Inc. , 583 S.W.3d at 562 (quoting Bradford , 48 S.W.3d at 755). The supreme court has concluded that a duty to disclose arises when there is a confidential or fidu ciary relationship. Insurance Co. of North America v. Morris , 981 S.W.2d 667, 674–75 (Tex. 1998). The court has also held that a duty to disclose arises in other circum stances, such as “[w]hen the particular circumstances impose on a person a duty to speak and he deliberately remains silent, [because] his silence is equivalent to a false representation.” Spoljaric v. Percival Tours, Inc. , 708 S.W.2d 432, 435 (Tex. 1986); see Smith v. National Resort Communities, Inc. , 585 S.W.2d 655, 658 (Tex. 1979) (“[A] seller of real estate is under a duty of disclosing material facts which would not be discoverable by the exercise of ordinary care and diligence on the part of the pur chaser, or which a reasonable investigation and inquiry would not uncover.”).

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