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Fraud in Contract

Fraud occurs when one party intentionally deceives another through false statements or actions. There are two main types of fraud in contracts: fraud in the inducement, where one party is tricked into signing a contract through misrepresentations, and fraud in the factum, where a party is unaware of key contract terms or obligations due to deception. For a fraudulent act to be considered fraud under law, it must involve a false statement of fact, intent to deceive, and actual deception of the other party. If fraud is found, the contract is void and not enforceable, and the deceived party can seek damages or compensation.

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Israr Ahmad
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180 views9 pages

Fraud in Contract

Fraud occurs when one party intentionally deceives another through false statements or actions. There are two main types of fraud in contracts: fraud in the inducement, where one party is tricked into signing a contract through misrepresentations, and fraud in the factum, where a party is unaware of key contract terms or obligations due to deception. For a fraudulent act to be considered fraud under law, it must involve a false statement of fact, intent to deceive, and actual deception of the other party. If fraud is found, the contract is void and not enforceable, and the deceived party can seek damages or compensation.

Uploaded by

Israr Ahmad
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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ISRAR AHMAD

FA21-LLB-B-068
OUTLINES

1. WHAT IS FRAUD?
2. WHAT IS FRAUD IN CONTRACT?
3. FORMS OR TYPES OF FRAUD
4. ESSENTIALS OF FRAUD
5. EFFECT OF FRUAD
FRAUD

An act of intentional deception designed to exploit a victim


FRAUD IN CONTRACT

A contract is a legally binding agreement between two parties. Simply put,


contract fraud occurs when a person knowingly makes a false statement in
order to have someone else agree to a contract. This act is intended to
deceive or trick the other person into signing a contract that they may not
otherwise agree to. Contract fraud may also occur when a person uses
misrepresentation to trick another person into signing a contract when that
other person does not believe that they are entering into a contract.
FORMS OF FRAUD

There are two types of fraud in contract


1. Fraud in the inducement
2. Fraud in factum
Forms of Fraud

Fraud in the inducement Fraud in the factum


Fraudulent inducement is a type of legal Fraud in the factum is a misrepresentation
claim often raised when a person has been that causes one party to enter into a
tricked or defrauded into entering into a transaction without clearly understanding
contract
the duties, obligations, or risks incurred
Example
Example
 Imagine that a customer walks on to a used
car lot to purchase a car. The salesman For instance, if you hire a company to do
shows the customer a used vehicle and tells plumbing work on your home and sign a
the customer that the vehicle has only contract for a set amount of money and the
50,000 miles on the odometer. The customer
buys the car. Later, the customer discovers
company then changes the contract after the
that the vehicle actually had 100,000 miles, fact to show that you will pay more for the
and the odometer has been altered. In such a job without your knowledge or agreement,
case, the customer was fraudulently induced that is fraud in the factum.
to enter into a contract to buy the car.
ESSENTIALS OF FRAUD

• False and Willful representation or Assertion


• Perpetrator of Representation
• Intention to deceive
• Representation must relate to a fact
• Promise made without intention of performing it
• Representation must have actually deceived the other party
• Any such Act or omission that the law specially declares as void
Effect of fraud

• Contract become void


• Contract is not enforceable
• Claim for damages or compensation

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