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See also:FRAUD (See also:Lat. fraus, deceit) , in its widest sense, a See also:term which has never been exhaustively defined by an See also:English See also:court of See also:law, and for legal purposes probably cannot usefully be defined. But as denoting a cause of See also:action for which See also:damages can be recovered in See also:civil proceedings it now has a clear and settled meaning. In actions in which damages are claimed for fraud, the difficulties and obscurities which commonly arise are due rather to the complexity of See also:modern See also:commerce and the ingenuity of modern swindlers than to any uncertainty or technicality in the modern law. To succeed in such an action, the See also:person aggrieved must first prove a See also:representation of fact, made either by words, by See also:writing or by conduct, which is in fact untrue. See also:Mere concealment is not actionable unless it amounts not only to suppressio veri, but to suggestio falsi. An expression of See also:opinion or of intention is not enough, unless it can be shown that the opinion was not really held, or that the intention was not really entertained, in which See also:case it must be See also:borne in mind, to use the phrase of See also:Lord See also:Bowen, that the See also:state of a See also:man's mind is as much a See also:matter of fact as the state of his digestion. Next, it must be proved that the representation was made without any honest belief in its truth, that is, either with actual knowledge of its falsity or with a reckless disregard whether it is true or false. It was finally established, after much controversy, in the case of Derry v. Peek in 1889, that a merely negligent misstatement is not action-able. Further, the person aggrieved must prove that the offender made the representation with the intention that he should See also:act on it, though not necessarily directly to him, and that he did in fact act in reliance on it. Lastly, the complainant must prove that, as the See also:direct consequence, he has suffered actual damage capable of pecuniary measurement. As soon as the case of Derry v. Peek had established, as the See also:general See also:rule of law, that a merely negligent misstatement is not actionable, a statutory exception was made to the rule in the case of See also:directors and promoters of companies who publish prospectuses and similar documents. By the Directors' Liability Act r89o, such persons are liable for damage caused by untrue statements in such documents, unless they can prove that theyhad reasonable grounds for believing the statements to be true, It is also to be observed that, though damages cannot be re-covered in an action for a misrepresentation made with an honest belief in its truth, still any person induced to enter into a See also:con-See also:tract by a misrepresentation, whether fraudulent or See also:innocent, is entitled to avoid the See also:contract and to obtain a See also:declaration that it is not binding upon him. This is in accordance with the rule of See also:equity, which since the Judicature Act prevails in all the courts. Whether the representation is fraudulent or innocent, the contract is not void, but voidable. The party misled must exercise his See also:option to avoid the contract without delay, and before it has become impossible to restore the other party to the position in which he stood before the contract was made. If he is too See also:late, he can only rely on his claim for damages, and in See also:order to assert this claim it is necessary to prove that the misrepresentation was fraudulent. Fraud, in its wider sense of dishonest dealing, though not a distinct cause of action, is often material as preventing the acquisition of a right, for which See also:good faith is a necessary See also:condition. Also a See also:combination or See also:conspiracy by two or more persons to defraud gives rise to liabilities not very clearly or completely defined. Additional information and CommentsThere are no comments yet for this article.
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