Fraud is a civil cause of action arising where one party creates a false impression that another party relies upon, and as a result of that reliance, suffers an injury. A fraud can be either active or passive. That is to say, a claim of fraud can be based on a false representation of a material fact, or the concealment or nondisclosure of a material fact.
Where the fraud is based on a party actively making a false representation, the party asserting the claim of fraud must first show there was a false representation of an existing fact. The representation can be spoken or written words; it can be conduct, or a combination of both. Either way, the false representation must create an untrue or misleading impression of past or present fact in the mind of another.
Once the false representation is established, the plaintiff must demonstrate that the fact that is the subject of the false representation is a material fact. A material fact is one that a reasonable person would attach importance to in determining a course of action. Not only must there be a false representation as to a material fact, but the party making that representation must have known it was false at the time that they made it. It is however sufficient that the party making the representation was aware that they did not know whether the representation was true or false at the time that they made it.
The person making a false representation must intend that the other party rely on the representation, and that party must actually rely on the false representation. Both the intent and the reliance can be inferred from the surrounding facts, as there is rarely direct evidence of intent or that the false representation was specifically relied upon in determining a course of action. Where a party relies on a false representation, that reliance must be justified. The determination of justified reliance must be considered in light of the intelligence, education and experience of the specific individual involved. Even in circumstances where a reasonably prudent person would not have relied on the false representation, a claim of fraud can succeed where a person of below-average intelligence or experience relied on the representation.
Finally, as in nearly all civil causes of action, in order to prevail a party must show that their reliance on the false representation caused harm or damage. There is no way around this element, without damages a claim for fraud cannot succeed.
Where the alleged fraud is an act of concealment or nondisclosure, the elements of the claim are very similar to those outlined above with a few modifications. Instead of a false representation of an existing fact, a party must show a concealment or nondisclosure of an existing fact, that the party had a duty to disclose. The duty to disclose can be a complicated question of law, but it generally involves the basic facts of a transaction. As above, the concealed or nondisclosed fact must be material.
The party concealing facts must also intend to create a false impression as to the actual facts and intend that the other party rely on the false impression. That party must actually rely on the false impression, and of course the reliance must be justified and must cause harm or damage to the relying party.
Fraud, like most civil causes of action must be proven by a preponderance of the evidence, which is to say that the judge or jury must find that it is more likely than not that each of the elements of fraud have taken place. Where a party can prove each element of fraud beyond a reasonable doubt (a much higher standard), extra or exemplary damages may be awarded beyond the harm or damage actually suffered.