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Intrinsic fraud refers to fraud in a party’s conduct of a prior litigation. It is deception that pertains to an issue involved in an original action. For example, fabricated evidence; perjured testimony. Intrinsic fraud goes to the heart of what a given lawsuit is about, in other words, whether fraud was used to procure the transaction. It is taken into consideration while determining general and punitive damages. Intrinsic fraud is distinguished from extrinsic fraud or collateral fraud which is a deceptive means of keeping a person from discovering and enforcing legal rights.
There are two types of intrinsic fraud: fraud in the inducement and fraud in the factum. 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 s/he will base his/her decision to act. On the other hand 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.