Constructive Fraud – unintentional deception or misrepresentation which injures another

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constructive fraud:

1. Unintentional deception or misrepresentation that causes injury to another.

2. See fraud in law. — aka legal fraud; fraud in contemplation of law; equitable fraud; fraud in equity. [1]

1. Legal fraud as distinguished from actual fraud, being presumed from the relation of the parties to a transaction or from the circumstances under which it takes place, not necessarily a matter of conscious wrongdoing.  37 Am J2d Fraud § 4.
      In its generic sense, “constructive fraud” comprises all acts, omissions, and concealments involving a breach of legal or equitable duty, trust, or confidence which result in damage to another.  Constructive fraud exists in cases in which conduct, although not actually fraudulent, ought to be so treated — that is, in which such conduct is constructive or quasi fraud which has all the actual consequences and legal effects of actual fraudRe Arbuckle’s Estate, 98 Cal App 2d 562, 220 P2d 950, 23 ALR2d 372. [2]

1. A breach of duty, trust, or confidence that results in damage to another; it does not necessarily involve conscious wrongdoing. [3]

     Excerpt from Encyclopedia of Criminology 175 (Vernon C. Branham 8: Samuel B. Kutash eds., 1949), s.v. “Fraud.”:

     “In equity law the term fraud has a wider sense, and includes all acts, omissions, or concealments by which one person obtains an advantage against conscience over another, or which equity or public policy forbids as being to another’s prejudice; as acts in violation of trust and confidence.  This is often called constructive, legal, or equitable fraud, or fraud in equity.” [4]

legal fraud:

1. Often regarded as synonymous with constructive fraud.  Precisely, actual fraud, that is, fraud of which the law will take cognizance as a cause of action or foundation of a defense.
Fraud without damage, or damage without fraud gives no cause of action, but when these two concur, an action lies.  This has long been recognized as the governing rule.  But the rule has been obscured by the judges in their use of the phrase “legal fraud,” which has sometimes been interpreted as a meaning fraud by construction, and as indicating that something less than actual fraud may sustain an action for deceit.  The gravamen of the action, however, is actual fraud, and nothing less will sustain it.  Kountze v Kennedy, 147 NY 124, 41 NE 414.

fraud in law:

1. Fraud that is presumed under the circumstances, without regard to intent, usually through statutorily created inference.  *  Fraud may be presumed, for example, when a debtor transfers assets and thereby impairs creditors’ efforts to collect sums due.  This type of fraud arises by operation of law, from conduct that, if sanctioned, would (either in the particular circumstance or in common experience) secure an unconscionable advantage, irrespective of evidence of an actual intent to defraud. — aka constructive fraud.  [1]


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[1]: Black’s Law Dictionary Deluxe Tenth Edition by Henry Campbell Black & Editor in Chief Bryan A. Garner. ISBN: 978-0-314-62130-6

[2]: Ballantine’s Law Dictionary with Pronunciations
Third Edition
 by James A. Ballantine (James Arthur 1871-1949).  Edited by William S. Anderson.  © 1969 by THE LAWYER’S CO-OPERATIVE PUBLISHING COMPANY.  Library of Congress Catalog Card No. 68-30931

[3]:  Ballantine’s Law Dictionary Legal Assistant Edition
by Jack Ballantine 
(James Arthur 1871-1949).  Doctored by Jack G. Handler, J.D. © 1994 Delmar by Thomson Learning.  ISBN 0-8273-4874-6.

[4]: Encyclopedia of Criminology 175 (Vernon C. Branham 8: Samuel B. Kutash eds., 1949), s.v. “Fraud.”


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