Fraud. – Generally
Fraud can be civil in nature, not just criminal; therefore, there are civil forms of relief to claims of fraud, in addition to criminal forms of relief.
Breach of contract, by itself, does not give grounds for an action of fraud. Because fraud requires a particular mental intent, fraud is much more difficult to establish than a breach of contract. Fraud is distinguished from a breach of contract because it is categorized as a tort; therefore, punitive damages are available.
A party alleging fraud must prove by clear and convincing evidence (1) a false representation, (2) of a present, material fact, (3) made intentionally and knowingly, (4) with intent to mislead, (5) reasonable reliance by the party misled, and (6) resulting damage to him. (see Winn v. Aleda Constr. Co., 227 Va. 304 (1984).
Elements. – Discussed
1. False Representation. A representation that is false must be made to you. If you were not told, or were unaware, no representation was made to you.
Example: A car salesman tells you a car you are looking at is in perfect condition, knowing that it is not. (You have been give a representation as to the condition of the car)
Example: You are looking at a car and a car salesman walks by and asks if you need help. You tell him you do not and that the car looks perfect. (You have not been given a representation as to the condition of the car)
2. Present, Material Fact. The misrepresentation must be in regards to something material. If the misrepresentation does not go to a material fact of an agreement, then you likely do not have an action for fraud.
Example: A car salesman tells you a car you are looking has all-wheel drive. (Likely that the option of front-wheel drive or all-wheel drive is a material fact to the purchasing of the vehicle).
Example: A car salesman tells you a car you are looking at comes with rubber floor mats and you find out that you actually have carpet floor mats. (Unless the floor mats are material to the exchange, it is unlikely that carpet floor mats as opposed to rubber floor mats will not count as a material misrepresentation that would rise to the level of fraud).
3 & 4. Intent. The person who is making the false misrepresentation must be intending to do so. This element becomes tricky as it is difficult to establish that an individual intended to defraud a victim. Circumstantial evidence may be used to establish this element.
5. Reasonable Reliance. This element is about the victim. If the victim does not believe the false misrepresentation, then the victim likely will not have an action for fraud. If the victim, however, believes the misrepresentation, it is not enough that the victim simply believed the representation; the victim must have relied on the representation and taken action as a result of that belief. The victim must reasonably believe the misrepresentation; that is, a representation made by an individual must be the type in which a reasonable person in the victim’s similar situation would have acted in a similar way the victim did.
6. Damages. As in all civil actions, a victim must be able to establish damages. Whether the damages are actual (able to be calculated by placing a dollar value on the amount) or not, damages are necessary to move forward with a civil action for fraud.