13.4.6 Hearer's Ignorance of the Falsity.

• Jurisdiction: Arizona

13.4.6 Hearer’s Ignorance of the Falsity. The sixth, seventh, eighth and ninth elements of a fraud claim address the recipient’s reliance on the actor’s representation(s) and whether such reliance is a legal cause of the claimed damages. Starting with the sixth element, a party must present proof that at the time it acted in reliance (or refrained from acting in reliance), it was unaware that the representation was false.⁶⁷ This is because a party cannot justifiably rely upon a representation that it knows to be untrue. The case of Wilson v. Byrd demonstrates this element, explaining why a recipient is not justified in such a situation.

In Wilson, the plaintiffs sued the defendants for breaching a conditional sales contract to purchase nightclub fixtures.⁶⁸ Defendants raised the defense of fraudulent inducement and asserted a counterclaim for fraud.⁶⁹ Defendants alleged that plaintiffs...