Civil Causes of Action - Fraud Law & Legal Definition


Fraud is generally defined in the law as an intentional misrepresentation of material existing fact made by one person to another with knowledge of its falsity and for the purpose of inducing the other person to act, and upon which the other person relies with resulting injury or damage. Fraud may also be made by an omission or purposeful failure to state material facts, which nondisclosure makes other statements misleading.

To constitute fraud, a misrepresentation or omission must also relate to an 'existing fact', not a promise to do something in the future, unless the person who made the promise did so without any present intent to perform it or with a positive intent not to perform it. The false statement or omission must be material, meaning that it was significant to the decision to be made. Also, an opinion does not constitute an existing fact and cannot be the basis of a claim of fraud unless the person stating the opinion has exclusive or superior knowledge of existing facts which are inconsistent with such opinion.

The misrepresentation or omission must be made knowingly and intentionally, not mistakenly or accidentally, sothat the person either knew or should have known of the falsity or acted in negligent disregard of its truth or falsity. The person charged with fraud must have intended the Plaintiff to rely on the misrepresentaion or omission and Plaintiff must have been injured by such reliance to prevail on the claim. Sometimes, it must be shown that Plaintiff's reliance was justifiable, and that upon easonable inquiry would not have discovered the truth of the matter. For injury or damage to be the result of fraud, it must be shown that, except for the fraud, the injury or damage would not have occurred. Fraud in the factum means fraud in the obtaining the execution of the agreement or delivery of a document. As opposed to fraud in inducing someone to sign a document, it is fraud regarding the contents of the document, so that the person defrauded is unaware of what they are signiing.