Fraud is a relatively well-known cause of action. Many people who know little about law have heard of fraud. And the word is used in common parlance.
The Merriam Webster Dictionary defines fraud as "deceit," "trickery," or as an "intentional perversion of truth in order to induce another to part with something of value or to surrender a legal right." That's not a bad legal definition either.
Fraud is generally described by courts as (1) a misrepresentation of fact, (2) which was false and known and known to be false by the defendant, (3) that the representation was made for the purpose of inducing the other party to rely upon it, (4) that the other party did justifiably so rely, (5) causing injury.
To Whom is the Misrepresentation Made?
These definitions and descriptions, however, generally presuppose that the misrepresentation at the heart of the claim was made by the defendant to the plaintiff; that is, by the alleged wrongdoer to the person who is harmed by the misrepresentation.
So that, by way of example, Mr. Buyer purchases a car from Mr. Seller, who represents that the car has never been in an accident, and after the purchase Mr. Buyer learns that the car was totaled and was later repaired with numerous rebuilt parts.
Misrepresentations to a Third Person
Sometimes, however, the misrepresentation was made by defendant but not to plaintiff; but instead to some other person.
As an example: John Smith falsely maintains to an insurance company that he is the same John Smith who is named as a beneficiary on another person's insurance policy. In that example, the intended John Smith was defrauded by a misrepresentation made not to him, but to someone else.
New York law sometimes allows a fraud action to go forward where the misrepresentation was made not to the injured party, but to a third party.
As one New York appellate court found, "Fraud . . . may also exist where a false representation is made to a third party, resulting in injury to the plaintiff." Another appellate court, several years ago, deemed it "relatively well settled" that a fraud action can be maintained even if the person who was harmed is not the same person to whom the misrepresentation was made.
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