FRAUD, contracts, torts. Any trick or artifice1 employed by one person to induce another to fall into an error, or to detain him in it, so that he may make an agreement contrary to his interest. The fraud may consist either, first, in the misrepresentation, or, secondly2, in the concealment3 of a material fact. Fraud, force and vexation, are odious4 in law. Booth, Real Actions, 250. Fraud gives no action, however, without damage; 3 T. R. 56; and in matters of contract it is merely a defence; it cannot in any case constitute a new contract. 7 Vez. 211; 2 Miles Rep. 229. It is essentially5 ad hominem. 4 T. R. 337-8.
2. Fraud avoids a contract, ab initio, both at law and in equity6, whether the object be to deceive the public, or third persons, or one party endeavor thereby7 to cheat the other. 1 Fonb. Tr. Equity, 3d ed. 66, note; 6th ed. 122, and notes; Newl. Cont. 352; 1 Bl. R. 465; Dougl. Rep. 450; 3 Burr. Rep. 1909; 3 V. & B. Rep. 42; 3 Chit. Com. Law, 155, 806, 698; 1 Sch. & Lef. 209; Verpl. Contracts, passim; Domat, Lois Civ. p. 1, 1. 4, t. 6, s. 8, n. 2.
3. The following enumeration8 of frauds, for which equity will grant relief, is given by Lord Hardwicke, 2 Ves. 155. 1. Fraud, dolus malus, may be actual, arising from facts and circumstances of imposition, which is the plainest case. 2. It may be apparent from the intrinsic nature and subject of the bargain itself; such as no man in his senses, and not under delusion9, would make on the one hand, and such as no honest and fair man would accept on the other, which are inequitable and unconscientious bargains. 1 Lev. R. 111. 3. Fraud, which may be presumed from the circumstances and condition of the parties contracting. 4. Fraud, which may be collected and inferred in the consideration of a court of equity, from the nature and circumstances of the transaction, as being an imposition and deceit on other persons, not parties to the fraudulent agreement. 5. Fraud, in what are called catching10 bargains, with heirs, reversioners) or expectants on the life of the parents. This last seems to fall, naturally, under one or more of the preceding divisions.
4. Frauds may be also divided into actual or positive and constructive11 frauds.
5. An actual or positive fraud is the intentional12 and successful employment of any cunning, deception13, or artifice, used to circumvent14, cheat, or deceive another. 1 Story, Eq. Jur. §186; Dig. 4, 3, 1, 2; Id. 2, 14, 7, 9.
6. By constructive fraud is meant such a contract or act, which, though not originating in any actual evil design or contrivance to perpetrate a positive fraud or injury upon other persons, yet, by its tendency to deceive or mislead. them, or to violate private or public confidence, or to impair15 or injure the public interests, is deemed equally reprehensible16 with positive fraud, and, therefore, is prohibited by law, as within the same reason and mischief17 as contracts and acts done malo animo. Constructive frauds are such as are either against public policy, in violation18 of some special confidence or trust, or operate substantially as a fraud upon private right s, interests, duties, or intentions of third persons; or unconscientiously compromit, or injuriously affect, the private interests, rights or duties of the parties themselves. 1 Story, Eq. ch. 7, §258 to 440.
7. The civilians19 divide frauds into positive, which consists in doing one s self, or causing another to do, such things as induce a belief of the truth of what does not exist or negative, which consists in doing or dis-simulating certain things, in order to induce the opposite party. into error, or to retain him there. The intention to deceive, which is the characteristic of fraud, is here present. Fraud is also divided into that which has induced the contract, dolus dans causum contractui, and incidental or accidental fraud. The former is that which has been the cause or determining motive20 of the contract, that without which the party defrauded21 would not have contracted, when the artifices22 practised by one of the parties have been such that it is evident, without them, the other would not have contracted. Incidental or accidental fraud is that by which a person, otherwise determined23 to contract, is deceived on some accessories or incidents of the contract; for example, as to the quality of the object of the contract, or its price, so that he has made a bad bargain. Accidental fraud does not, according to the civilians, avoid the contract, but simply subjects the party to damages. It is otherwise where the fraud has been the determining cause of the contract, qui causam dedit contractui; in that case. the contract is void. Toull. Dr. Civ. Fr. Liv. 3, t. 3, c. 2, n. §5, n. 86, et seq. See also 1 Malleville, Analyse de la, Discusssion de Code Civil, pp. 15, 16; Bouv. Inst. Index, h. t. Vide Catching bargain; Lesion; Voluntary Conveyance24.
