August 11, 2021
Contract fraud occurs when a party knowingly makes a false claim in order to induce another party to enter a contract, and/or a party makes a false claim as to information included in the contract itself. Upon the finding of fraud, either in the contract itself or as an inducement to enter the agreement, the contract is voidable. In other words, contract fraud renders a contract voidable at the election of the injured or defrauded party. The California civil code section which discusses the voidability of fraudulent contracts states the following:
Voidability of Contracts per California Civil Code § 1812.215: Fraudulently Induced Contracts: “(a) If a seller uses any untrue or misleading statements to sell or lease a seller assisted marketing plan, or fails to comply with Section 1812.203, or fails to give the disclosure documents or disclose any of the information required by Sections 1812.205 and 1812.206, or the contract does not comply with the requirements of this title, then within one year of the date of the contract at the election of the purchaser upon written notice to the seller, the contract shall be voidable by the purchaser and unenforceable by the seller or his assignee as contrary to public policy and the purchaser shall be entitled to receive from the seller all sums paid to the seller when the purchaser is able to return all equipment, supplies or products delivered by the seller; when such complete return cannot be made, the purchaser shall be entitled to receive from the seller all sums paid to the seller less the fair market value at the time of delivery of the equipment, supplies or products not returned by the purchaser, but delivered by the seller.