The common understanding of fraud varies quite a bit from its legal definition. In Virginia, there is a heightened pleading standard for fraud and it must be proved by “clear and convincing evidence.” In order to prove actual fraud, you must show there was a “(1) a false representation, (2) of a material fact, (3) made intentionally and knowingly, (4) with intent to mislead, (5) reliance by the party misled, and (6) resulting damage to the party.” Richmond Metro. Auth. v. McDevitt St. Bovis, Inc., 256 Va. 553, 557 (1998). For example, if someone tells you the fishing boat you are looking to buy is in working condition, although they know it is not, and you purchase the boat, you have a claim for fraud. A plaintiff that successfully proves fraud can recover punitive damages.
As you might imagine, when someone fails to perform a contractual obligation, the other party often feels as if they have been “defrauded.” However, Virginia courts are wary of treating every breach of contract claim as a fraud claim. In light of this cautioned approach, unfulfilled contractual promises alone cannot form the basis for a fraud claim. Instead, the adequate remedy would be breach of contract.
Nevertheless, if a person makes a promise to perform some task, but has no intention of actually fulfilling that promise, an actionable claim for fraud may exist. In such scenarios, it’s essential to prove that at the time the promise was made, the individual had the present intention not to perform (i.e. fraudulent intent). This is commonly referred to as fraud in the inducement. Contrary to actual fraud, fraud in the inducement and breach of contract can be pleaded simultaneously. The justification for this relies on the fact that the fraudulent inducement occurred prior to the contract’s formation. Therefore, the duty owed does not find its source in the contract.
If you believe you have been defrauded, contact a Virginia fraud lawyer at 703-280-0037.