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Wills • Capacity
WILLS#017
Legal Definition
Fraud requires: (1) a misrepresentation, (2) of material fact, (3) known to be false by the wrongdoer, (4) for the purpose of action or inaction, (5) that in fact induced the action or inaction desired.
Plain English Explanation
Lying to people may make someone a bad person, but it isn't generally against the law. However, when someone lies in order to get someone else to give them something, or do something, or not do something, then we call it "fraud."
Fraud requires: (1) a misrepresentation (i.e., a flat-out lie or at least an inappropriate stretching of the truth); (2) of a material fact (i.e., something that is important enough to matter if someone lies about it); (3) that is known to be false by the person saying it (i.e., if someone accidentally misrepresents something, they may be stupid, but they are not necessarily a wrongdoer); (4) for the purpose of getting someone to do something, or not to do something; and (5) ultimately, the person being deceived must actually be deceived. If they don't end up being harmed by the attempted fraud, then fraud has not occurred.
Fraud requires: (1) a misrepresentation (i.e., a flat-out lie or at least an inappropriate stretching of the truth); (2) of a material fact (i.e., something that is important enough to matter if someone lies about it); (3) that is known to be false by the person saying it (i.e., if someone accidentally misrepresents something, they may be stupid, but they are not necessarily a wrongdoer); (4) for the purpose of getting someone to do something, or not to do something; and (5) ultimately, the person being deceived must actually be deceived. If they don't end up being harmed by the attempted fraud, then fraud has not occurred.
Hypothetical
Hypo 1: Bob tells Sam that his car can fly. Sam, believing this, buys the car for a huge sum. Result: This is fraud because Bob lied about an important fact (flying cars), knew it was a lie, had a plan (to sell the car), and Sam was tricked.
Hypo 2: Bob claims his homemade tonic can cure baldness. Sam buys it, but it doesn't work. Result: Fraud again! Bob's lie about the tonic (important fact), which he knew was false, was meant to make Sam buy it, and Sam fell for it.
Hypo 3: Bob, a painter, tells Sam that his paintings will triple in value in a year, knowing that his paintings have never increased in value and that there is no market demand for them. Bob makes this claim with the intent to deceive Sam into buying the paintings. Relying on Bob’s statement, Sam buys several paintings. A year later, the paintings do not increase in value, and Sam realizes he was misled. Result: This is fraud. Bob knowingly made a false statement about the future value of his paintings with no reasonable basis for the claim, intending to deceive Sam into buying the paintings. Sam relied on this false statement and suffered a financial loss as a result. All the elements of fraud are present: false representation, intent to deceive, reliance, and harm.
Hypo 4: Bob mistakenly tells Sam that a used laptop is new. Sam buys it, thinking it's new. Result: This isn't fraud. Bob didn't know he was lying about the laptop's condition, so it wasn't known to be false when he made the claim.
Hypo 2: Bob claims his homemade tonic can cure baldness. Sam buys it, but it doesn't work. Result: Fraud again! Bob's lie about the tonic (important fact), which he knew was false, was meant to make Sam buy it, and Sam fell for it.
Hypo 3: Bob, a painter, tells Sam that his paintings will triple in value in a year, knowing that his paintings have never increased in value and that there is no market demand for them. Bob makes this claim with the intent to deceive Sam into buying the paintings. Relying on Bob’s statement, Sam buys several paintings. A year later, the paintings do not increase in value, and Sam realizes he was misled. Result: This is fraud. Bob knowingly made a false statement about the future value of his paintings with no reasonable basis for the claim, intending to deceive Sam into buying the paintings. Sam relied on this false statement and suffered a financial loss as a result. All the elements of fraud are present: false representation, intent to deceive, reliance, and harm.
Hypo 4: Bob mistakenly tells Sam that a used laptop is new. Sam buys it, thinking it's new. Result: This isn't fraud. Bob didn't know he was lying about the laptop's condition, so it wasn't known to be false when he made the claim.
Related Concepts
How do you make a prima facie case for undue influence?
In California, can an attorney who drafts a will for their client be a beneficiary?
In California, when is there a statutory presumption of undue influence?
In California, when is there no presumption of undue influence for a donative transfer?
What happens if someone fraudulently prevents someone from creating a will?
What is an insane delusion?
What is fraud in the execution?
What is fraud in the inducement?
What is required for valid testamentary capacity?
What is undue influence?
What relief is available if mistake in the inducement occurs?
When assessing undue influence, what is the presumption test?
When does a mistake in the execution occur and what is the result?
