Under contract law, a defendant can be liable to a plaintiff for constructive fraud if there was: (1) a false misrepresentation; (2) in reference to a material fact; (3) for the purpose of inducing the other party to rely on such representation; 4) on which the other party did justifiably rely; (5) which resulted in damages or injury; and (6) a fiduciary relationship between the parties. Hagarty v. Ithaca City School District, 423 N.Y.S. 2d 843 (1979).
Bad intent or dishonesty is not a requirement to satisfy constructive fraud.
The elements for actual and constructive fraud are the same with two exceptions: constructive fraud drops the element of scienter--knowledge on the part of the injurer of the representation’s falsity--and adds the element of a fiduciary relationship.
Definition from Nolo’s Plain-English Law Dictionary
When the circumstances show that someone's actions give that person an unfair advantage over someone else by unfair means (lying or not telling a buyer about defects in a product, for example), the court may decide to treat the situation as if there was actual fraud even if all the technical elements of fraud have not been proven.
Definition provided by Nolo’s Plain-English Law Dictionary.
August 19, 2010, 5:13 pm