Fraud, in law, general term for any instance in which one party deceives or takes unfair advantage of another.
Any means used by one person to deceive another may be defined as fraud. For example, if a person represents himself or herself as the agent of a business with which he or she is unconnected and causes another to make a contract to the other party's disadvantage or injury, the first party is guilty of fraud. Furthermore, if, in making a contract, a person obtains an unjust advantage because of the youth, defective mental capacity, or intoxicated condition of the other party to the contract, he or she is guilty of fraud.
In a court of law, it is necessary to prove that a representation was made as a statement of fact; that it was untrue and known to be untrue; that it was made with intent to deceive and to induce the other party to act upon it; and that the other party relied on it and was induced to act or not to act, to his or her injury or damage.
In equity, fraud includes any act, omission, or concealment, involving a breach of legal or equitable duty or trust, which results in disadvantage or injury to another. An example of fraud in this sense is the act of an insolvent who contrives to give one creditor an advantage over the others. Fraud can also be constructive, that is, deemed fraud by interpretation. The sole difference in the case of constructive fraud is that no dishonest intent need be adduced. It arises from a breach of duty, such as the breach of a fiduciary relationship in which a trust or confidence has been betrayed.
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