You did your part — you reviewed the deal, signed in good faith and moved forward, thinking everything seemed straightforward at the time. But now, you are starting to notice details the other side chose not to disclose, or worse, realizing they told you things that were not true, and that changes everything.
If the other side lied, are you still bound to the agreement?
When a false statement becomes a misrepresentation
California law does not let you walk away from a contract just because someone exaggerated, but if the other side made a false claim about something that mattered and you relied on that claim when deciding to sign, the courts view that as misrepresentation – and yes, it can be grounds to cancel the deal.
The lie does not have to be outrageous; it might be a hidden financial issue, an inflated promise about capabilities or a key detail left out entirely. What matters is whether the falsehood changed your decision and whether the contract would have looked different or never existed at all had you known the truth.
How rescission works in real life
Canceling a contract due to fraud is not just about stopping performance — it’s about unwinding the whole deal. The legal term is rescission, and when a court grants it, both sides usually have to give back whatever they’ve received: money, goods, services or benefits. You cannot claim fraud and still keep what you gained from the contract.
To get there, you will need to show three things: the lie was material, you relied on it in good faith and you acted after its discovery. If you delay or keep fulfilling the contract, your right to rescind might slip away.
Be careful what you do next
Once you suspect fraud, don’t rush to act — pause and start documenting everything you were told and when, whether that’s in messages, emails or proposals. While it may feel urgent to escalate, threaten or pull out of the deal, those reactions can backfire if not grounded in solid legal footing.
Talk to someone who knows how to navigate these situations, because even if the law is technically on your side, what you do next could heavily influence how your case unfolds.
If the deal no longer feels right
The law gives you options, but it also expects you to handle the issue the right way. If you are stuck in a deal that never should have been signed, you don’t have to stay silent. Get clarity first; then decide whether you are walking away or just walking smarter.