Fraud in the Inducement/ Fraud in the Procurement Law & Legal Definition


Fraud in the inducement is the use of deceit or trick to cause someone to act to his/her disadvantage, such as signing an agreement. The heart of this type of fraud is misleading the other party as to the facts upon which he/she will base his/her decision to act. A person is induced to enter into a transaction with a false impression of the risks, duties, or obligations involved. There is intentional misrepresentation of a material risk or duty reasonably relied on, thereby injuring the other party without vitiating the contract itself. For example, A tells his mother to sign a deed giving him her property, and his mother refuses to do so. A falsely tells her that the bank will foreclose on the property unless she signs it over to him. If A’s mother signs the deed because of this statement from A, and A tries to enforce the deed, Mother can plead "fraud in the inducement." Fraud in the inducement is also termed as fraud in the procurement