Fraud in Contract Law

The death knell of any contract is Fraud. Fraud as a legal concept is not limited merely to contract law or civil litigation, and often carries criminal consequences. However within the context of contract law, fraud is generally described as deliberation deception, often used for material gain or to harm another. Fraud is an obviously serious charge, and as contracts often demand a mutual trust between parties, fraud can serve to immediately sever that contractual relationship.

The main distinction between Fraud and misrepresentation, the other major form of misinformation within contracts, is intent. Though all types of misinformative claims can nullify a contract by their mere existence, Fraud necessitates an intent to deceive or dupe, while misrepresentation can either be negligent, (carelessness in regards to false information), or innocent, (wherein the misinforming party genuinely believed the information to be true).

The basic elements of Fraud are as such;

1. A false statement of a material fact.

2. Knowledge on the part of the stating party as to the falseness of the statement.

3. Intent on the part of the stating party to deceive the victim.

4. Justifiable reliance on the false statement by the victim.

5. Injury to the victim resulting from that reliance.

In order to prove fraud, the claimant must show that a false statement was made, the statement was material to the agreement, they relied on the statement, and they suffered harm as a result.

Once fraud has been proven, its existence almost always serves to nullify any contract for which it was generally responsible. Though in contract law and civil litigation Fraud can lead to court judgments demanding damages, in criminal law Fraud may be punished by serious fines or even imprisonment, depending on the severity of the matter at hand.

If you have any questions, or require any assistance, the experienced lawyers at Sari Law Firm are alway available to provide clear and concise legal aid in regards to your contracts and contract issues.