Intent to Deceive Contract Law: Everything You Need to Know
Intent to deceive contract law pertains to fraudulent deception that results in a broken contract.3 min read
Updated November 17, 2020:
Intent to deceive contract law pertains to fraudulent deception that results in a broken contract. To constitute a fraudulent misrepresentation, there must be a sustained intent to deceive an opposite party. The attribute of intent also mandates that a deceiver should know that information that a person spreads is untrue. Also, withholding information constitutes fraud. The technical term for such intent to do harm is also called scienter. The scienter pertains to the etymology of the word science. Both words aim to the acquiring of knowledge. If you need to prove a case in court, ensure that you have sufficient evidence before going before a judge.
Where the law is concerned, fraud within agreements could find that scienter takes place where one party to an agreement knows that one of the facts affecting the agreement in question is not true as mentioned in the agreement. Scienter is also assessed by laws that govern agreements; wherein one party in a contract makes a statement with no regard as to whether the statement they made was or false or true. Laws note that such willful ignorance of an individual statement will rise to the level of fraudulent misrepresentation. Scienter may also be discovered to exist if a party accused has noted that his or her statements stem from personal research or knowledge when such research or knowledge has no root in reality whatsoever.
Most company owners enter agreements in good faith, realizing that sound agreements are the foundation of constructing a successful company. With that, there are times when you enter into contract fraud in various business dealings, or you may find yourself accused at times. In such a case, it is always best to retain an attorney if such an instance occurs. Moreover, you should also know the elements of fraud, so you can avoid it.
The Definition of Fraud
Contract fraud happens when a party in an agreement presents information to another in a fraudulent manner. Overall, the information conveyed is meant to deceive or falsely get another party to enter an agreement under false pretenses.
For example, agreement fraud could be found when an individual claims that he or she is selling a vehicle, when in fact the terms of the agreement detail that it is regarding the sale of a motorcycle.
You should also be aware of two contract fraud types:
1. Fraud in factum
2. Fraud in inducement
When it comes to inducement, this occurs when fraud taints an entire contract. The victim is deceived into signing a contract. For instance, a person can sign an agreement at the behest of a real estate agent, even though the agent may not be licensed.
Fraud in factum occurs when fraud exists regarding a certain description contained within a contract. For example, a party agrees to buy 10 items. However, the seller really intends for the buyer to purchase 50 items.
To prove fraud exists, you must demonstrate the following factors:
1. Where a party intentionally mispresents a fact
2. An intent to defraud or deceive another party
Moreover, the other party should rely on misrepresentation, and misrepresentation must cause a loss of some kind. Legally speaking, the attributes of deceit and fraud are complicated and certain torts mandate proof of the wrongful act to level the appropriate solution.
One of the primary remedies regarding contract fraud is a monetary award. This provides compensation to aggrieved parties that suffered a loss from the fraud. This would reimburse a victimized party compensation for the losses. If a plaintiff paid money stemming from a fraudulent contract, the judge will provide reimbursement to the plaintiff. If a monetary sum does not sufficiently provide just compensation, an injunction would be used to achieve the proper solution. One defense of an agreement is also called unclean hands.
In other words, the single party cannot sue the other party if that person has unclean hands, which means that they have entered in the same violation type as the offending party. Regarding fraud, this means that a party may not sue the other for fraud if that person has engaged in some the of fraud.
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