23 CAL.JUR.2d


2. Definitions and Distinctions.  –  The statutory definitions, though broad, do not embrace every species of fraud.   Fraud has been judicially defined as the successful employment of cunning, deception, or artifice to circumvent, cheat, or defraud another, and also is the unlawful appropriation of another’s property by design.

It is been said that undue influence and fraud are not identical; one has reference to the subjugation of the will, the other to a deception.   In a sense undue influence is a species of fraud, but it may be exercised without any actual fraud or false representation.   It follows that no allegation of fraud is necessary in a charge of undue influence.   On the other hand, undue influence may be exerted by means of fraud; confidence or influence may be used to obtain unfair advantage and of a variety of ways, no less by means of fraudulent misrepresentations than by means of duress or other pressure.

An act done in good faith is, of course, one done honestly, without fraud, collusion, deceit, or pretense.

3. Fraud in General; Actual Fraud. –  Fraud is broadly classified as actual or as constructive.   And though the statutory provisions defining fraud are found in the part of the code relating to contracts, there is nothing there to show that such provisions are not intended to apply to fraud generally.  

Actual fraud is defined and the Civil Code is any of the following acts committed by a party to a contract or with his connivance, with intent to deceive another party thereto or to induce him to enter into a contract: the suggestion, as a fact, of that which is not true by one who does not believe it to be true; the positive assertion in a manner not warranted by the information of the person making it of that which is not true, though he believes it to be true; the suppression of that which is true by one having knowledge or belief of the fact; a promise made without any intention of performing it; or any other act fitted to deceive.

4. Deceit.  –  The willful deceit of another with intent to induce him to alter his position to his injury or risk, for which the deceiver will be liable, may consist of the suggestion as a fact of that which is not true by one who does not believe it to be true; of the assertion as a fact of that which is not true by one who has no reasonable ground for believing it to be true; of the suppression of a fact by one who is bound to disclose it or who gives information of other facts likely to mislead for want of communication of that fact; or of a promise made with no intention of performing it.    Deceit is, of course, species of fraud, and a comparison of the above with the code definition of actual fraud indicates the futility of attempting to differentiate the two.   In fact, deceit has been defined as actual fraud.   But deceit may be said to have a broader significance in fraud when the latter term is used to indicate an act whereby one does, or may, suffer financial loss.   Any device by which one misleads or deceives another to his injury constitutes deceit.   It should be noted that the suppression of a fact is deceit only one the one withholding information owes a duty to another to disclose it.   

5. Constructive Fraud. –  Constructive fraud consist of any breach of duty that, without any actually fraudulent intent, gains an advantage to the person and fault or one claiming under him, by misleading another to his prejudice or to that of anyone claiming under him or of any act or omission that the law specially declares to be fraudulent without regard to actual fraud. Constructive fraud is most often encountered in the breach of duty where relation of trust and confidence exists, or in the taking advantage over incompetent persons, or an otherwise gaining unconscionable advantage.

6. Confidential Relations.  –  Constructive fraud often arises in transactions where there exist confidential or fiduciary relationships that have been abused by the party in whom a confidence is reposed.   In such cases there may be no actual fraud, but fraud is presumed from the fact that the one in whom confidence is reposed availed himself of that trust to obtain an advantage at the expense of the confiding party, without reference to the question of fraudulent intent.   This is particularly true where relation of dependence, trust, and confidence is combined with gross inadequacy or entire failure of consideration.

Confidential and fiduciary relations are in law synonymous may be said to exist whenever trust and confidence are reposed by one person in the integrity and fidelity of another.   In such a relationship, the party in whom the confidence is reposed, if he voluntarily accepts or assumes to accept the confidence, may take no advantage from his acts relating to the interest of the other party without the latter’s knowledge or consent; he must refrain from abusing such confidence by obtaining any advantage to himself at the expense of the confiding party.



11.  In General; Elements of Actionable Fraud. - Generally, to establish a cause of action for fraud or deceit based on misrepresentation, the plaintiff must show that the representation was as to a material fact;  that it was false and known to be false by the party making it, or else made recklessly, or without reasonable grounds for believing its truth;  that the representation was made with intent to induce the other party to do or refrain from doing some act;  that I was relied on by the other party, this, that such other party was actually mislead and deceived and induced by to act or refrain from acting;  that in so acting or refraining from acting the latter was ignorant of the falsity of the representation and reasonably believed it to be true; and that he thereby suffered damage or injury.   The absence of any one of these elements is generally fatal to a recovery.


There can be no fraud in the pursuance of a remedy allowed by law.
Pehrson v. Hewitt (1889) 79 Cal. 594

Pertinacious zeal to secure the payment of a just debt is not fraudulent.
Van Valkenberg v. Oldham (1910) 12 Cal.App. 572
Thompson v. Mortgage Investment Company (1929) 99 Cal.App. 205

    pertinacious >adjective formal stubborn; persistent.
    -DERIVATIVES pertinaciously >adverb pertinacity >noun.
    -ORIGIN from Latin pertinax 'holding fast'.

All deceitful practices in depriving or endeavoring to deprive another of his known right by means of some artful device or plan, contrary to the rules of common honesty, are fraud.
Newman v Smith (1888) 77 Cal. 22

Fraud includes all surprise, trick, cunning, dissembling, and unfair ways by which another is deceived.
Wells v. Zenz (1927) 83 Cal.App. 137

To defraud means to deprive of right, either by procuring something by deception or artifice, or by appropriating something wrongfully.
People v. Wilkins (1924) 67 Cal.App. 758

Undue influence is a species of constructive fraud which the court will not undertake to defined by any fixed principles less the definition itself point out the path by which it may be evaded.
Sparks v. Sparks (1950) 101 Cal.App.2d 129

Fraud or arises out of a breach of duty or obligation which one owes another.
Brady v. Bartlett (1880) 56 Cal. 350

Constructive fraud in its generic sense comprises all acts, omissions, and concealments involving a breach of legal or equitable duty, trust, or confidence resulting in damage to another.
Arbuckle Estate (1950) 98 Cal.App.2d 562

Breach of duty is used in CC 1573 may be fairly said to be but the correlate of for injury suffered by one and caused by the participation or cooperation in a wrong way by another.
McFate v. Bank of America (1932) 125 Cal.App. 683

if there is a duty to speak because of a trust or confidential relationship, failure to do so is a species of fraud for which equity may afford relief.
Blair v. Mahon (1951) 104 Cal.App.2d 44

Where confidential relation exists, a transaction between them by which the person in the superior position gains an advantage over the other is constructively fraudulent, and the burden is on the party who has gained the advantage to show fairness in good faith in all respects.
Johnson v. Clark (1936) 7 Cal.2d 529

Individuals and confidential relations are not prohibited from dealing with each other, but in all their dealings respecting the subject matter of the relation the utmost good faith is required in the burden of proof is on the person trusted to show affirmatively that he acted in good faith, fairly, and honestly.
Hemenway v. Abbott (1908) 8 Cal.App. 450

Confidential relation may in law be defined to be any relation existing between parties to a transaction wherein one of the parties is bound to act with the utmost good faith for the benefit of the other.
Bacon v.  Soule (1912) 19 Cal.App. 428

A cause of action for constructive fraud predicated on the relation of the parties arises only one a special confidential or fiduciary relation exists between them investing one of them with the power and means to take undue advantage of or exercise undue influence over the other.
Menke v. Rand Mining Company (1947) 81 Cal.App.2d 169

Equity always views with strictness the business dealings of a man with one who stands in a position of dependence or confidence to him, whether that relationship is voluntarily assumed or is imposed by operation of law.
Ruhl v. Mott (1898) 120 Cal. 668

Subsequent developments may throw light on a party’s good faith.
Wehner v. Wehner (1924) 68 Cal.App 789

The charge of fraud is usually made out solely from statements and acts of the perpetrators.
Brandenburger v. Chipman (1924) 87 Cal.App. 707

Intent to deceive is usually proved by inference rather than by direct evidence.
Bell v. Graham (1951) 105 Cal.App.2d 765

Since direct proof of fraudulent intent is often impossible, proof indicative of fraud may be given by inference, by circumstances surrounding the transaction, and by the relationship and interest of the parties.
Taylor v. Osborne-Fitzpatrick Fin. Co. (1943) 57 Cal.App.2d 656
Dyke v. Zaiser (1947) 80 Cal.App.2d 639
Bohn v. Watson (1954) 130 Cal.App.2d 24

In the investigation of a question of fraud, courts should be exceptionally liberal in the receipt of evidence tending to disclose the true nature of the transaction.
Butler-Veitch, Inc. v. Barnard (1926) 77 Cal.App 709

No matter how slight the tendency of evidence may be to prove fraud, it is not for that reason incompetent.
Corson v. Butler (1890) 86 Cal. 433

One’s intent not to perform a promise, at the time the promise was made, is usually not susceptibel of direct proof, but such intent may be ascertained from subsequent conduct and speech.
Klutts v. Rupley (1943) 58 Cal.App.2d 560

It is usually difficulty to establish fraud clearly, and positive and express proof is not required.
Shively v. Eureka Tellurium Gold Min. Co. (1907) 5 Cal.App 236
Fraud is generally proved by inference from facts and circumstances and not by direct and positive proof.
Del Vecchio v. Savelli (1909) 10 Cal.App 79
Williams v. Myers (1930) 110 Cal.App. 265
Anderson v. Medical Examiners (1931) 117 Cal.App. 113
O’Hare v. Peacock Dairies, Inc. (1938) 26 Cal.App.2d 345


B.  Misrepresentation

Words or conduct of one party that misrepresent facts (e.g. "this car has never been in an accident") or conceal facts, or the failure of one party to disclose facts known to her, may induce the other to enter a contract based on incorrect assumptions.  Justifiable reliance upon a misrepresentation, or upon beliefs uncorrected because of concealment or non-disclosure, may in some cases permit the party who is misled to escape the contract.

In contrast to fraud in the inducement (where the resulting contract is voidable), no contract is even formed where there has been fraud in factum. 

Fraud is a subset of misrepresentation.   Misrepresentation (or concealment) intended to induce assent of the other party is fraudulent when the party making the representation (or concealing a fact) intends the representation to induce assent by the other party and knows the representation to be untrue (or the concealed fact to be true).

Negligent misrepresentation or innocent misrepresentation, like fraud, are subsets of misrepresentation, and each of the three subsets collectively constitute "fraud in the inducement."

We apprehend, however, that the California court has the authority to refuse to exercise judicial jurisdiction if the basis of that jurisdiction, i.e., the physical presence of the children in this state, has been obtained by fraud or unlawful force. (Rest.2d Conflict of Laws, 82, p. 247.) The rationale behind this principle is that a person should not be permitted to profit from his use of fraud or unlawful force. (Rest., supra.) In the present case there is no contention that the physical presence of the children in this state was procured by unlawful force since it is clear that they were voluntarily sent to California by petitioner pursuant to his agreement with real party.
Titus v. Superior Court, 23 Cal.App.3d 792
[Civ. No. 30332. Court of Appeals of California, First Appellate District, Division One. February 25,1972.]

Fn. 1   Fraud in the inducement does not render a contract void, but rather renders it avoidable and subject to ratification. 1A Corbin, Contracts 6 at 12-13 and 146 at 636 (1963). Fraud in the inducement thus does not nullify the making of the contract, but may render the contract unenforceable by a party because of his own conduct. By the same token, laches raised as a defense does not nullify the obligations of a contract, but may render them unenforceable by a party because of his own conduct.
United States Court of Appeals, Seventh Circuit. July 9, 1971, Rehearing Denied Aug. 11, 1971.

Fraud in the Factum is a type of fraud where misrepresentation causes one to enter a transaction without accurately realizing the risks, duties, or obligations incurred.[1] This can be when the maker or drawer of a negotiable instrument, such as a promissory note or check, is induced to sign the instrument without a reasonable opportunity to learn of its fraudulent character or essential terms. Determination of whether an act constitutes fraud in the factum depends upon consideration of “all relevant factors.” Fraud in the factum usually voids the instrument under state law and is a real defense against even an holder in due course.

Contrast this with the situation where a trusted employee signs a check without permission. The employer must still honor the check despite the fact that the check was a fraudulent negotiable instrument. Here, the employer had a reasonable opportunity to avoid the obligation by restricting access to the checks.

Fraud in the factum is often contrasted with fraud in the inducement.

1.    Fraud in the factum is a legal defense, and occurs where A makes/signs an agreement, but either does not realize that it is supposed to be a contract, or does not understand the nature/content of the agreement, because of some false information that B gave to A. For example, suppose John tells his mother that he is taking a college course on handwriting analysis, and for his homework he needs her to read and sign a pretend deed. If Mom signs the deed believing what he told her, and John tries to enforce the deed, Mom can plead "fraud in the factum."
2.    Fraud in the inducement is an equitable defense, and occurs when A enters into an agreement, knowing that it is supposed to be a contract and (at least having a rough idea) what the agreement is about, but the reason A signed/made the agreement was because of some false information that B gave to A. For example, suppose John tells his mother to sign a deed giving him her property, Mom refuses at first, but then John falsely tells her that the bank will foreclose on the property unless she signs it over to him. If Mom signs the deed because of this statement from John, and John tries to enforce the deed, Mom can plead "fraud in the inducement."

In Boro v. Superior Court, 163 Cal. App. 3d 1224 (1985), the defendant phoned the victim saying he was "Dr. Stevens" from the hospital and that the victim had a life-threatening disease.  He further presented two options for treatment: option one was to have a painful surgery costing the victim $9,000; option two was to have sex with an anonymous donor costing the victim only $1,000.  The victim had intercourse with the defendant believing at the time that her life was threatened and that was the only choice she had to cure the disease.  The victim, upon learning the truth, brought charges against the defendant for rape.  The court held this was fraud in the inducement and therefore, there was no rape.  It was fraud in the inducement because the deception related not to the thing done - the sexual intercourse - but merely to some collateral matter (cure from a life-threatening disease).