The elements of intentional or fraudulent misrepresentation are as follows:

1. (1) A representation;
2. (2) which is material to the transaction at hand;
3. (3) made falsely, with knowledge of its falsity or recklessness as to whether it is true or false;
4. (4) with the intent of misleading another into relying on it;
5. (5) justifiable reliance on the misrepresentation; and,
6. (6) the resulting injury was proximately caused by the reliance.

The representation need not be in the form of a positive assertion. It can consist of anything calculated to deceive, whether by single act or combination, whether by suppression of truth or a suggestion of what is false, and it includes direct falsehoods, innuendos, silence, gestures, etc. There are two separate torts that impose liability for fraud notwithstanding the absence of an positive assertion: (1) Fraudulent Concealment; and (2) Fraudulent Nondisclosure. See, e.g., Youndt v. First Nat. Bank of Port Allegany, 868 A. 2d 539 (Pa. Super. 2005).

Fraudulent Concealment is defined as existing where one party to a transaction, by concealment or other action, intentionally prevents the other from acquiring material information. Thus a defendant is subject to liability for a fraudulent misrepresentation if he paints over and so conceals a defect in a chattel or a building that he is endeavoring to sell to the plaintiff, and thus induces the plaintiff to buy it in ignorance of its defective character. See Restatement (Second) Torts §550 (1977).

Fraudulent Nondisclosure arises where:

1. (1) One who fails to disclose to another a fact that he knows may justifiably induce the other to act or refrain from acting in a business transaction is subject to the same liability to the other as though he had represented the nonexistence of the matter that he has failed to disclose, if, but only if, he is under a duty to the other to exercise reasonable care to disclose the matter in question.
2. (2) One party to a business transaction is under a duty to exercise reasonable care to disclose to the other before the transaction is consummated,(a) matters known to him that the other is entitled to know because of a fiduciary or other similar relation of trust and confidence between them; and (b) matters known to him that he knows to be necessary to prevent his partial or ambiguous statement of the facts from being misleading; and (c) subsequently acquired information that he knows will make untrue or misleading a previous representation that when made was true or believed to be so; and (d) the falsity of a representation not made with the expectation that it would be acted upon, if he subsequently learns that the other is about to act in reliance upon it in a transaction with him; and (e) facts basic to the transaction, if he knows that the other is about to enter into it under a mistake as to them, and that the other, because of the relationship between them, the customs of the trade or other objective circumstances, would reasonably expect a disclosure of those facts.

A party seeking to recover on a claim of fraudulent misrepresentation must show that their reliance was justifiable. As discussed in Busy Bee Inc. v. Corestates Bank N.A, 67 Pa. D. & C. 4th 486 (Lackawanna County 2004)

"The recipient of a fraudulent misrepresentation is not justified in relying upon its truth if he knows that it is false or its falsity is obvious to him." See Silverman v. Bell Savings & Loan Association, 367 Pa. Super. 464, 473, 533 A.2d 110, 115 (1987); Textile Biocides Inc. v. Avecia Inc., 52 Pa. D. & C.4th 244 (Phila. Cty. 2001). Under the Restatement standard, "although the recipient of a fraudulent misrepresentation is not barred from recovery because he could have discovered its falsity if he had shown his distrust of the maker's honesty by investigating its truth, he is nonetheless required to use his senses, and cannot recover if he blindly relies upon a misrepresentation, the falsity of which would be patent to him if he had utilized his opportunity to make a cursory examination or investigation." Silverman, 367 Pa. Super. at 473-74, 533 A.2d at 115 (quoting Restatement (Second) of Torts § 541 comment a).

Negligent Misrepresentation

Under certain circumstances, a party can be liable for negligent misrepresentation. See, e.g., Bilt-Rite Contractors, Inc. v. Architectural Studio, 866 A.2d 270 (Pa. 2005). In Bilt-Rite] a school district entered into a contract with an architect to prepare the architect prepared drawings for the construction of a new school. On the basis of these drawings, the school district solicited bids from contractors for the construction of the school. Bilt-Rite submitted the winning bid, and its subsequent contract with the school board specifically referred to the architect’s drawings. Based on errors in the architect’s plans, Bilt-Rite was forced to substantially increase its construction costs, and [it] sued the architect for negligent misrepresentation. The Pennsylvania Supreme Court [held] that the architect could be liable to Bilt-Rite for negligent misrepresentation, in spite of their lack of contractual privity and the traditional bar against recovery in tort for economic losses. In so doing the Court Court explicitly adopted Restatement (Second) of Torts § 552.

Section 552, which is entitled “Information Negligently Supplied for the Guidance of Others,” provides that one, who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business trans-actions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information. Liability is limited, however, to those persons for whose benefit and guidance he intends to supply the information or knows that the recipient intends to supply it and through reliance upon it in a transaction that he intends the information to influence or knows that the recipient so intends or in a substantially similar transaction.

Note that a negligent supplier of information may be liable to a third party who relief on the information. That was the case in Bilt-Rite.

Integration Clauses and Fraudulent Misrepresentation

Issues pertaining to misrepresentation frequently arise in sale transactions. One way of heading off such issues on the part of sellers is to utilize integration clauses in the sale agreement. "Where the parties, without any fraud or mistake, have deliberately put their engagements in writing, the law declares the writing to be not only the best, but the only, evidence of their agreement. All preliminary negotiations, conversations and verbal agreements are merged in and superseded by the subsequent written contract ... and unless fraud, accident or mistake be averred, the writing constitutes the agreement between the parties, and its terms and agreements cannot be added to nor subtracted from by parol evidence." Yocca v. Pittsburgh Steelers Sports, Inc., 854 A. 2d 425, 436 (Pa. 2004). The fraud or mistake to which the Court referred was in the execution, i.e., that a term was fraudulently omitted from the contract. On the other hand, parol evidence may not be admitted based on a claim that there was fraud in the inducement of the contract, i.e., that an opposing party made false representations that induced the complaining party to agree to the contract. 854 A. 2d at 437, n. 26. See also Blumenstock v. Gibson, 811 A.2d 1029, 1036 (Pa.Super.2002) (parol evidence of representations is inadmissible as to a matter covered by a written agreement with an integration clause unless the parties agreed that those representations would be added to the written agreement but they were omitted because of fraud, accident or mistake). "An integration clause which states that a writing is meant to represent the parties' entire agreement is also a clear sign that the writing is meant to be just that and thereby expresses all of the parties' negotiations, conversations, and agreements made prior to its execution." 854 A. 2d at 436. See also Blumenstock, 811 A.2d at 1036 ("the case law clearly holds that a party cannot justifiably rely upon prior oral representations yet sign a contract denying the existence of those representations").