Essay on "Fraud Is an Important Consideration"

Essay 2 pages (708 words) Sources: 3

[EXCERPT] . . . .

If a party has obvious reasons for doubting the validity of the statements made by fraudulent party or knows for a fact that the other party is lying then there is no justifiable reliance and there is no provable fraud.

Once a material misrepresentation is demonstrated and the reliance is shown to be justifiable the party alleging fraud must still demonstrate that he has suffered an injury as a result of the fraudulent party's actions (Harris, 2005). Fraud may exist but unless there are provable damages there will be no finding of fraud. As in nearly every contract action, the typical damages are measured in terms of money.

In most situations, an actionable case of contract fraud provides a party with two available remedies: 1) rescind the contract and receive a refund of any consideration that has already been paid, or 2) affirm the contract and sue for any provable decrease in the value of the contract. The aggrieved party must elect between these two available remedies. In tort cases involving fraud the victimized party is entitled to seek punitive damages but in contract fraud cases punitive damages are generally not available nor are nominal damages.

In some jurisdictions there is also the possibility that a finding of contract fraud could result in criminal penalties be assessed against the fraudulent party. In the jurisdictions where this is applicable, this would only occur in the most significant or egregious of cases and the sanctions applied would be limited to the payment of civil damages. In a very limited number of cases, criminal fines or even jail time might be applied but this is likely only when the aggrieved party is a government agency. For the most part, the courts are reluctant to involve themselves in private contract matters.

References

Blair, A. (2009). A Matter of Trust: Should No-Reliance Clauses Bar Claims for Fraudulent Inducement of Contract. Marquette Law Review, 423-475.

Harris, D. (2005). Remedies in Contract and Tort. New York: Cambridge University Press.

Shell, G.R. (1991). When is it Legal to Lie in… READ MORE

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