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What is Legal Fraud?

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  • Written By: Maggie J. Hall
  • Edited By: Susan Barwick
  • Last Modified Date: 06 November 2016
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    Conjecture Corporation
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Legal fraud involves intentionally misleading someone into believing a falsehood for personal gain. The perpetrator makes false statements or conceals pertinent information for the purpose of persuading another individual to perform a particular action. By placing trust in the dishonest person, the manipulated individual suffers damages or injury. The plaintiff whose lawsuit asserts that he or she was defrauded must prove a certain set of facts in order for a court to find in his or her favor.

Fraud may occur in any number of ways, including during a face-to-face transaction, through the mail, by telephone or on the Internet, and individuals as well as corporations can fall victim to legal fraud. Victims of legal fraud have the right to seek compensation through a court of law. The court usually expects the injured party to verify damage claims and may also award punitive damages in addition to reimbursement for actual financial losses.

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During a legal fraud trial, the plaintiff must prove the misrepresentation of fact to the court. The law does not consider behavior to be fraudulent when actions, based on a hunch, prediction or opinion of another do not result in the intended result. The plaintiff must show that he or she was completely ignorant of the false information and must explain why the defendant received this person’s misguided trust. The court generally expects the plaintiff to explain why he or she relied on the defendant’s information. Evidence of damages or injury directly related to the fraud must also be presented.

The plaintiff must also prove that the defendant was aware of the falsehood or misinformation and that the defendant misrepresented a situation intentionally as a means of directing the unsuspecting individual toward a preplanned outcome. Sometimes an individual may have unintentionally committed a fraudulent act. This is called constructive fraud and may occur when an individual fails to perform a legal duty. Witnesses or patterns of repetitive behavior may be helpful in substantiating legal fraud.

Courts more easily recognize legal fraud if the defendant held a position in which a greater amount of knowledge concerning a situation was expected. Consumers frequently put confidence and trust in a variety of people expected to be educated or trained in a particular profession. These persons include attorneys, healthcare providers, repairpersons and teachers.

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