The Person Who Makes the False Representation Must Know It to Be False or Make It Recklessly without Regard to Its Truth

Fraud clearly exists when a person deliberately makes a false statement or conceals a material fact. Fraud also exists if a person makes a statement of fact rashly, without determining its truth or falsity. This is especially true if that person should know the facts.

The Misrepresentation Must Be Made with the Intention of Influencing the Other Person to Act upon It

For a statement to be fraudulent, the person making the statement must intend that it be relied upon and acted upon. Generally the false statement is made directly to the intended victim. However, this is not essential. A person may tell something with the intent that the statement will be passed on to another, whose conduct is to be influenced.

Text 3 The Rights of the Defrauded Party

Contracts entered into as a result of fraud are voidable by injured party. Thus, a defrauded party may repudiate (disaffirm) the agreement. Normally when one decides to disaffirm a contract, anything that has been received must be returned. A deceived party who has performed part of the contract may recover what has been paid or given under its terms.

If sued on the contract, the defrauded party can plead fraud as a defense. In either case, the victim may sue in tort and collect damages caused by the fraud.

A defrauded person may choose not to disaffirm but instead to ratify the agreement. Either party may then enforce it. However, a defrauded party who decides to ratify an agreement may seek reimbursement (financial compensation) for any loss suffered.

Vocabulary

prospect предполагаемый клиент

insolvent неплатежеспособный

deliberate намеренный, предумышленный

fraudulent обманный; мошеннический

defrauded обманутый; потерпевший от мошенничества