Have I been defrauded?

Common Definition of Fraud

Most people view fraud as “an act of deceiving or misrepresenting.” See http://www.merriam-webster.com/dictionary/fraud. This colloquial use of the term “fraud” causes many people to believe that if someone said something that is untrue, then that person has committed fraud.  The term “fraud,” as a legal term, is much narrower than this common understanding.

Legal Definition of Fraud

In order for fraud to exist legally, then the elements of a fraud cause of action must exist.  “The elements of an action in deceit based on fraudulent misrepresentation are: (1) a representation; (2) concerning a presently existing material fact; (3) which was false; (4) which the representor either (a) knew to be false, or (b) made recklessly, knowing that he had insufficient knowledge upon which to base such representation; (5) for the purpose of inducing the other party to act upon it; (6) that the other party, acting reasonably and in ignorance of its falsity; (7) did in fact rely upon it; (8) and was thereby induced to act; (9) to his injury and damage.” Dugan v. Jones, 615 P.2d 1239 (Utah 1980).  For fraud to exist legally, it is not enough for a statement to be false.  There must be both an intent to deceive and damages cause by reliance on the false statement.

Even if all the elements of fraud are not met, there may be alternative but similar legal theories that could be proven, such as claims for negligent misrepresentation or fraudulent non-disclosure.

Proving Fraud

“In all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity.” Utah Rules of Civil Procedure 9(b).  For fraud to be properly alleged with particularity, Plaintiff “must state with particularity the circumstances supporting each element of fraud.” Otsuka Electronics v. Imaging Specialists, et al., 937 P.2d 1274, ¶24 (Utah Ct. App. 1997).  Sometimes, a plaintiff may not know whether each element of fraud can be proven at the time of a lawsuit is filed.  If he has a good faith basis to believe that an element has been met, he can allege the facts that would satisfy each element “upon information and belief.”

Most parties do not simply admit to committing fraud.  Extrinsic evidence may be used to prove each element.  For example, while a defendant may claim not to have known that a representation was false, extrinsic evidence can refute the defendant’s claim.

Many fraud cases involve real estate deals.  The language in the related contracts and deeds is often the best indication of whether fraud occurred.

For more specific information about this particular subject, please call my office at 801-691-7770 for a free consultation or see the following web pages:

1.      Whiting & Jardine, LLC Home Page: www.WhitingJardine.com

2.      Litigation: http://whitingjardine.com/services.php?part=litigation

3.      Sales & Purchase Agreements: http://whitingjardine.com/practice_areas.php?part=purchase

4.      Transactions: http://whitingjardine.com/services.php?part=transactions

5.      Contract Negotiation and Drafting: http://whitingjardine.com/practice_areas.php?part=contract

Disclaimer: This blog is for general information and educational purposes only.  Nothing in this blog should be construed as legal advice for any particular situation.  The statements in this blog may be generalized, contain speculation, be based on opinion, or be made inaccurate by updates or clarifications to the law.  No attorney-client relationship is created by virtue of this blog.  To receive competent legal advice for your situation, you should seek competent, licensed legal counsel in the appropriate jurisdiction and practice area.