FRAUD – Legal Liability for Fraud – Civil Tort for Constructive Fraud or Negligent Misrepresentation
August 27, 2019
A common question is, “What is Fraud”? Civil fraud can arise when a fraudster misrepresents to a fraud victim a material fact. A fraudster can be liable for constructive fraud or negligent misrepresentation even if the fraudster may have honestly believed that the false representation was true. The law holds that a fraudster may be found liable for constructive fraud or negligent misrepresentation, if the fraudster had no reasonable grounds for believing the representation was true when s/he made it assuming that the fraudster intended for the fraud victim to rely on that representation. In this situation the fraudster is subject to liability for constructive fraud, negligent misrepresentation and other equivocal fraud related causes of action.
There are various grounds for which a wrongdoer can be held legally liable for fraud, one of which is constructive fraud or negligent misrepresentation. A fraudster is held legally liable for fraud when money, property or personal gain is acquired by making a false representation of a material fact.
California Civil Code Section 1573: encapsulates legal liability for constructive fraud or negligent misrepresentation as follows:
CONSTRUCTIVE FRAUD. Constructive fraud consists: 1. In any breach of duty which, without an actually fraudulent intent, gains an advantage to the person in fault, or any one claiming under him, by misleading another to his prejudice, or to the prejudice of any one claiming under him; or, 2. In any such act or omission as the law specially declares to be fraudulent, without respect to actual fraud.
This post is one of a series of Fraud blogs discussing the specific California Civil Code Sections that encapsulate civil liabilities for fraud. Additional posts in this Fraud series are linked below:
If you have fallen victim to fraud or have questions about legal liability as it relates to constructive fraud or negligent misrepresentation we encourage you to contact our offices at 619-432-5145 for a free consultation with one of our civil fraud attorneys and fraud lawyers.