Fraud in Factum / Fraud in Making Law and Legal Definition

Fraud in factum is a type of fraud that occurs when misrepresentation causes one to enter into a transaction without accurately realizing the risks, duties, or obligations incurred. Fraud in factum occurs when a legal instrument actually executed differs from the one intended for execution by the person who executes it as s/he is induced to sign the instrument without reasonable opportunity to learn of its fraudulent character or essential terms. For example, a blind person signing a mortgage when misleadingly told that it is just a letter. Generally, fraud in the factum voids the instrument under state law and is a real defense against even an holder in due course.

Fruad in factum is also termed as fraud in the execution or fraud in the making.