What are the elements of Fraud?

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pohnpei397's profile pic

pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted on

There are five elements that must be present in order for fraud to have occurred.

First, there must be a false statement that is related to a material, or relevant, fact.  The simple existence of a false statement is not, in and of itself, an element of fraud.  For example, if I am selling a car and it has 21,000 miles on it and I say it has 20,000 miles, that false statement is probably not important enough to influence the potential buyer.  So, the false statement must be important.

Second, the defendant must know that the statement is false.

Third, the defendant must make the statement in order to influence the victim.  There must be intent on the part of the defendant in order for fraud to exist.

Fourth, the victim must have good cause to rely on the fraudster’s statement.  The statement must be in some way plausible.  If I claim that my used car can fly and can also go underwater, the buyer has no good reason to believe what I am saying.

Finally, the false statement must in same way harm the victim.

All of these factors must be present in order for fraud to exist. 

crashs1824's profile pic

crashs1824 | (Level 1) Adjunct Educator

Posted on

As with nearly any crime or civil law violation in the United States, the specific elements of fraud can vary from state to state. However, at common law, fraud has nine elements:

1. a representation of a fact,

2. that the fact represented is material,

3. this represented material fact was in fact false,

4. the person representing the material fact knew it was false,

5. the false representation of the fact was for the purpose of, having another party act upon said false representation,

6. the other party was not aware that the represented fact was in fact false,

7. the other party reasonably relied on said falsely represented fact,

8. the other party had some right or justification to rely upon this falsely represented fact,

9. and the other party suffered damages as a result of relying on this falsely represented fact.

To prove fraud at common law, each of these elements had to be pled with particularity and proven. Today, most state's fraud laws are at least somewhat based on or have some similarity with these nine common law fraud elements.

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