Constructive 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 by made by an omission or purposeful failure to state material facts, which nondisclosure makes other statements misleading.

Constructive fraud is considered fraud under the law although deceptive intent is missing because it has the same consequences as an actual fraud would have. It is a finding imposed in the interest of fairness and justice, such as to prevent violation of a public or private trust or confidence, the breach of a fiduciary duty, or the use of undue influence.

Black's law dictionary defines constructive fraud as "all acts, omissions, and concelaments involving breach of equitable or legal duty, trust or confidence, and resulting in damage to another, 38 Cal Rptr. 148, 157; i.e. no scienter is required. Thus the party who makes the misrepresentation need not know that it is false.'"