Misrepresentation and Fraud in Hawaii

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If a person or entity has been deceived, Hawaii law provides for a means of redress.  Under Hawaii’s doctrine of fraudulent inducement, if a person enters into a contract due to the misrepresentations of the other contracting party, the person lied to may ask the court to invalidate the terms of the contract.  The Hawaii Supreme Court recognizes the elements of fraudulent inducement to be as follows:

To constitute fraudulent inducement sufficient to invalidate the terms of the contract, there must be (1) a representation of material fact, (2) made for the purpose of inducing the other party to act, (3) known to be false but reasonably believed true by the other party, and (4) upon which the other party relies and acts to [his or her] damage.

Matsuura v. E.I. du Pont de Nemours and Co., 102 Hawaii 149, 162-63, 73 P.3d 687, 700-01 (Hawaii 2003) (quoting Hawaii Community Federal Credit Union v. Keka, 94 Hawaii 213, 230, 11 P.3d 1, 18 (2000)).

However, not every representation will be actionable.  The Intermediate Court of Appeals has held that only the following representations are actionable:

The false representation, to be actionable, must relate to a past or existing material fact, and not to the happening of future events[.]  Generally, fraud cannot be predicated upon statements [that] are promissory in their nature at the time they are made and [that] relate to future actions or conduct.  A promise relating to future action or conduct will be actionable, however, if the promise without the present intent to fulfill the promise[.]

Pancakes of Hawaii, Inc. v. Pomare Properties Co., 85 Hawaii 300, 312 944 P.2d 97, 109 (Haw.Ct.App. 1997) (quoting Honolulu Federal Savings and Loan Ass’oc v. Murphy, 7 Haw.App. 196, 200 753 P.2d 807, 811 (Haw.Ct.App. 1988)). 

Additionally, the party seeking to have the contract invalidated must prove that his or her reliance on the false representation was a reasonable one.  Exotics Hawaii-Kona, Inc. v. E.I. Du Pont De Nemours & Co., 116 Hawai’i 277, 172 P.3d 1021 (2007).  Finally, in addition to the above mentioned elements, the party seeking to invalidate the contract will have to prove that he or she suffered some sort of injury or damage as a result of the other party’s misrepresentations.  Matsuura, 102 Hawaii at 163, 73 P.3d at 701. 

Moreover, the Hawaii Unfair and Deceptive Trade Practices Act (H.R.S. § 480-2) provides a remedy to consumers and investors injured through marketing materials that had a “capacity to mislead.”  A Plaintiff prevailing in a claim under H.R.S. § 480-2 may be awarded treble damages, attorneys fees and costs (H.R.S. § 480-13).