Fraud Generally

Fraud is an intentional tort. For a claim to be successful on this basis, there must an element of fraudulent intent, or an intent to deceive.This intent distinguishes a statement from actionable negligent misrepresentation and from non-actionable innocent misrepresentation.


Intentional Misrepresentation

For a claim for intentional misrepresentation to be valid, a party must show that defendant represented that an important fact was true, that representation was actually false, defendant knew the statement was false when it was made (or made it recklessly without regard for the truth), defendant intended the party to rely on the representation, the party indeed reasonably relied on the representation and was harmed by it and that reliance was a substantial factor in causing the harm. For example, in a real estate transaction, a statement by a seller that the roofing on the house was"installed last week" when it was actually 2 years old, would be an intentional misrepresentation if buyer reasonably relied on this statement and was ultimately harmed by it.



Concealment is a common scenario whereby a party to a contract intentionally conceals an important fact. To prove as such, defendant must have intentionally failed to disclose an important fact, the other party was unaware of the fact, defendant intends to deceive by concealing the fact, the party reasonably relied on the representation and was harmed by it and that reliance was a substantial factor in causing the harm. Concealment arises most frequently in situations where there is a legal or financial relationship ("fiduciary duty") between the parties, such as business partners.


Negligent Misrepresentation

Misrepresentations that are not intentional may still be actionable. The elements for negligent misrepresentation are nearly the same to those for intentional misrepresentation except that for negligent misrepresentation defendant need not know a statement was false when made. Instead, although defendant may have honestly believed that the representation was true, they had no reasonable grounds for believing its truth when the statement was made. If the statements were reckless or no true belief in their validity exists, a statement will still be considered intentional misrepresentation.


Opinions--usually not covered

Ordinarily, a statement of opinion made by a party typically does not form a basis for actionable fraud. An opinion in this context is best describe as a person's belief that a fact exists, a statement regarding a future event, or a judgment about quality, value or authenticity. A statement of opinion may form a basis for fraud if it is made by an expert with special knowledge, declared in a manner so as to be construed as true, there is a special relationship or trust between the parties, or some other special reason which would allow reasonable reliance on the statement as truth.



There are countless variations of fraud, misrepresentation and deceit. The nuances between the different types are often difficult to ascertain. It is important to consult with an experienced fraud/business attorney if a party feels they have been a victim of fraud.