Nine Elements of Common Law Fraud.

In order to prove fraud certain requirements must be met before a prosecution can be pursued.  Below are the nine elements in the Law that are necessary to prove fraud:

1. Representation – the simplest type of representation is an affirmative statement of a fact made directly by the person claiming the false claim.  It can also be a statement that one has no knowledge of a fact or issue or an intentional understatement or overstatement of cost or value.

2. Falsity – to prove fraud the representation must not be true.

3. Materiality – a “material representation” is one that would be likely to affect the conduct of a reasonable person with regards to transaction that is subject of the claim.

4. The Speaker’s Knowledge of Falsity or Reckless Disregard of the Truth – the person making the statement must either know the statement was false, or be aware that they lack the knowledge as to its truth or falsity.  Showing the representation was made recklessly without the knowledge of the truth or falsity can also prove fraud.

5. Intent that Representation be Acted Upon – the intent of the speaker must be to mislead or deceive the hearer.

6. Hearer’s Ignorance of Falsity - the hearer was not aware that the statement was false.

7. Reliance – the hearer must rely on the speaker’s representation.

8. Hearer’s Right to Rely – the hearer has a right to rely on the speaker’s representation.

9. Damages – damages are considered “general” and “punitive”.  General damages are the amount paid as a result of the fraudulent representation.  Punitive damages are provided by a showing of egregious conduct on the part of the defendant.