Cultic Studies Journal, Vol. 12, No. 1, 1995, page 10
The undue influence issues surrounding donations of time, money, or property to cults and
organizations, religious or not, revolve around when and under what conditions the
donations were given. Courts differ on their focus, using the general principles mentioned,
but often reviewing and emphasizing particular aspects of the questioned activities and
transactions. As in the area of fraud and misrepresentation, an evaluation of case law leads
to the conclusion that the decisions are decided in part on the “personalities” involved,
frequently invoking circumstantial evidence, instead of a pure, absolute legal doctrinal basis.
Fraud and Misrepresentation: Legal Principles
Fraud, broadly defined, includes any misrepresentation or deception resorted to for the
purpose of gaining advantage over another. All acts and concealments which breach a legal
or equitable duty and result in damage are fraud. Without a breach of some legal or
equitable duty, fraud cannot exist.
The term fraud is often confused as synonymous with duress. The essential difference
between fraud and duress is that an individual injured in fraud lacks true knowledge of the
facts or acts with reliance on misrepresentation in cases of duress, the individual is fully
aware and is compelled to act because of the awareness of the forces or threats.
Undue influence is also considered by some as a type of fraud. But again there is a
distinction between the terms. Fraud always requires a misrepresentation undue influence
does not. The two, however, may exist together in the same action.
The two general types of fraud are actual and constructive fraud. In actual fraud there is a
dishonest intent to deceive someone into relinquishing property or surrendering some right.
Dishonesty or falsehood is an essential element of actual fraud. Constructive fraud arises
out of a breach of duty, frequently a confidential relationship, and intended deception is not
required, though it may often be present. These distinctions in the types of fraud, however,
do not extend to legal effects.
Your son, Jason, is a sophomore at a business college upstate. You telephone, but
learn Jason “just moved out yesterday” to live with a group of new friends. Jason
does call that night he’s “all right ...just real busy working and studying.” You’re
pleased that he finally took your advice about a part-time job and with his
newfound enthusiasm for school. On why he moved, he explains, “I had no friends
there anyway, there’s no rent charge here while I’m in training.”
A brief list of the requirements of actionable fraud is: the representation (statement or
information) its falsity scienter (the knowledge that charges a person with the
consequences of his actions) deception and injury.
A more detailed list of elements required for actionable fraud is: (1) a representation (2) its
falsity (3) its materiality (4) the speaker‟s knowledge of its falsity or ignorance of its truth
(5) the speaker‟s intent that it should be acted on by another in a reasonably contemplated
manner (6) the hearer‟s ignorance of the falsity (7) the hearer‟s reliance on its truth (8)
the hearer‟s right to rely and (9) the hearer‟s consequent and proximate injury.
Some state statutes and courts abbreviate or condense the essential elements of fraud
others specifically omit consideration of particular elements. In a minority of jurisdictions,
for example, scienter is not required, in others fraudulent intent is not essential.
All jurisdictions, however, recognize actionable fraud to provide that someone who willfully
misleads another with the intent to induce him to act or not act in a way causing injury is
liable for damages.
An example of a standard state statutory definition for fraud is: an intentional
misrepresentation, deceit, or concealment of a material fact where the concealing party had
The undue influence issues surrounding donations of time, money, or property to cults and
organizations, religious or not, revolve around when and under what conditions the
donations were given. Courts differ on their focus, using the general principles mentioned,
but often reviewing and emphasizing particular aspects of the questioned activities and
transactions. As in the area of fraud and misrepresentation, an evaluation of case law leads
to the conclusion that the decisions are decided in part on the “personalities” involved,
frequently invoking circumstantial evidence, instead of a pure, absolute legal doctrinal basis.
Fraud and Misrepresentation: Legal Principles
Fraud, broadly defined, includes any misrepresentation or deception resorted to for the
purpose of gaining advantage over another. All acts and concealments which breach a legal
or equitable duty and result in damage are fraud. Without a breach of some legal or
equitable duty, fraud cannot exist.
The term fraud is often confused as synonymous with duress. The essential difference
between fraud and duress is that an individual injured in fraud lacks true knowledge of the
facts or acts with reliance on misrepresentation in cases of duress, the individual is fully
aware and is compelled to act because of the awareness of the forces or threats.
Undue influence is also considered by some as a type of fraud. But again there is a
distinction between the terms. Fraud always requires a misrepresentation undue influence
does not. The two, however, may exist together in the same action.
The two general types of fraud are actual and constructive fraud. In actual fraud there is a
dishonest intent to deceive someone into relinquishing property or surrendering some right.
Dishonesty or falsehood is an essential element of actual fraud. Constructive fraud arises
out of a breach of duty, frequently a confidential relationship, and intended deception is not
required, though it may often be present. These distinctions in the types of fraud, however,
do not extend to legal effects.
Your son, Jason, is a sophomore at a business college upstate. You telephone, but
learn Jason “just moved out yesterday” to live with a group of new friends. Jason
does call that night he’s “all right ...just real busy working and studying.” You’re
pleased that he finally took your advice about a part-time job and with his
newfound enthusiasm for school. On why he moved, he explains, “I had no friends
there anyway, there’s no rent charge here while I’m in training.”
A brief list of the requirements of actionable fraud is: the representation (statement or
information) its falsity scienter (the knowledge that charges a person with the
consequences of his actions) deception and injury.
A more detailed list of elements required for actionable fraud is: (1) a representation (2) its
falsity (3) its materiality (4) the speaker‟s knowledge of its falsity or ignorance of its truth
(5) the speaker‟s intent that it should be acted on by another in a reasonably contemplated
manner (6) the hearer‟s ignorance of the falsity (7) the hearer‟s reliance on its truth (8)
the hearer‟s right to rely and (9) the hearer‟s consequent and proximate injury.
Some state statutes and courts abbreviate or condense the essential elements of fraud
others specifically omit consideration of particular elements. In a minority of jurisdictions,
for example, scienter is not required, in others fraudulent intent is not essential.
All jurisdictions, however, recognize actionable fraud to provide that someone who willfully
misleads another with the intent to induce him to act or not act in a way causing injury is
liable for damages.
An example of a standard state statutory definition for fraud is: an intentional
misrepresentation, deceit, or concealment of a material fact where the concealing party had
