Cultic Studies Journal, Vol. 12, No. 1, 1995, page 12
must be shown by a pecuniary loss or personal injury caused by the alleged fraud. However
slight, any damage will suffice. Courts have recognized many types of damages in fraud
cases including loss through the purchase, sale, or exchange of property physical injury
imprisonment and loss of conjugal rights.
It’s a new business venture he heard about from a friend he now lives with. He
said he’s soliciting new investors by telephone, learning “how to lobby, you know,
convince people” and there’s that promised “good job” after training. “I’m learning
more than I ever did in school.”
While damages are controlled by each jurisdiction‟s case and statutory law, the Second
Restatement of the Law of Torts notes that in certain circumstances compensatory damages
may be awarded without proof of pecuniary loss for emotional distress. Restatement Torts
2d §905. But protection against disagreeable emotions not involving bodily pain is ordinarily
only given when infringement of another interest occurs. Disruption of a marital
relationship, for example, can be the basis of a tort action for the mental distress of
humiliation. And the loss of freedom for a significant period, even without proof of physical
harm or pecuniary loss, can result in damages if the defendant intentionally caused the
imprisonment.
The focus for the courts is damage to the plaintiff, not benefit to the defendant. Even if the
defendant received no benefit or gain actionable fraud still exists.
Generally, injury to a third party alone is not sufficient. A third party stranger to a
transaction, who cannot claim under the person directly defrauded, has no personal right of
action. But the courts will permit a third party to sustain an action where it can be proven
that the third party was the real focus or target of the fraud.
A person cannot be held liable for fraudulent misrepresentations unless he made them
himself or authorized another to do so. But anyone who knowingly accepts the fruits or
benefits of fraud is liable --even if the person lacks direct participation in the fraud itself.
Substantive defenses of fraud claims, as a rule, focus on proving the absence of one or
more of the essential statutory elements of actionable fraud. If a defendant can successfully
argue that an essential element is missing, the fraud charge must be dismissed.
The major presumption in fraud cases involves fiduciary relationships. There is a
presumption of fraud where a fiduciary profits at the expense of one who confides in him.
The burden of establishing the existence of the fiduciary relationship resides with the injured
party, but the burden then shifts to the fiduciary to attempt to prove that the questioned
conduct was free of fraud.
Six months after Jason’s “training” began, the job promised remains illusive.
Jason seems stressed, and shows signs of doubt. “Money’s down,” he says. “If I
don’t get more investors, the whole thing could fall apart. Maybe it will anyway.”
He doesn’t pay rent, meals are provided, and there seems to be some type of
“training,” but...
Without a fiduciary relationship, there is a usual presumption against fraud and favoring the
existence of honest, fair dealing. In nonfiduciary cases, fraud must be proven by the
preponderance of the evidence. Courts will often consider and rule based on circumstantial
evidence, provided that the evidence proves a clear inference of fraud and not a mere
suspicion or conjecture.
Relief in most fraud cases is a return to the status quo --placing the injured party in a
position as close as possible to where he would have been had the fraud not occurred. In
cases where plaintiffs prove a violation of a duty resulting from a trust or confidential
must be shown by a pecuniary loss or personal injury caused by the alleged fraud. However
slight, any damage will suffice. Courts have recognized many types of damages in fraud
cases including loss through the purchase, sale, or exchange of property physical injury
imprisonment and loss of conjugal rights.
It’s a new business venture he heard about from a friend he now lives with. He
said he’s soliciting new investors by telephone, learning “how to lobby, you know,
convince people” and there’s that promised “good job” after training. “I’m learning
more than I ever did in school.”
While damages are controlled by each jurisdiction‟s case and statutory law, the Second
Restatement of the Law of Torts notes that in certain circumstances compensatory damages
may be awarded without proof of pecuniary loss for emotional distress. Restatement Torts
2d §905. But protection against disagreeable emotions not involving bodily pain is ordinarily
only given when infringement of another interest occurs. Disruption of a marital
relationship, for example, can be the basis of a tort action for the mental distress of
humiliation. And the loss of freedom for a significant period, even without proof of physical
harm or pecuniary loss, can result in damages if the defendant intentionally caused the
imprisonment.
The focus for the courts is damage to the plaintiff, not benefit to the defendant. Even if the
defendant received no benefit or gain actionable fraud still exists.
Generally, injury to a third party alone is not sufficient. A third party stranger to a
transaction, who cannot claim under the person directly defrauded, has no personal right of
action. But the courts will permit a third party to sustain an action where it can be proven
that the third party was the real focus or target of the fraud.
A person cannot be held liable for fraudulent misrepresentations unless he made them
himself or authorized another to do so. But anyone who knowingly accepts the fruits or
benefits of fraud is liable --even if the person lacks direct participation in the fraud itself.
Substantive defenses of fraud claims, as a rule, focus on proving the absence of one or
more of the essential statutory elements of actionable fraud. If a defendant can successfully
argue that an essential element is missing, the fraud charge must be dismissed.
The major presumption in fraud cases involves fiduciary relationships. There is a
presumption of fraud where a fiduciary profits at the expense of one who confides in him.
The burden of establishing the existence of the fiduciary relationship resides with the injured
party, but the burden then shifts to the fiduciary to attempt to prove that the questioned
conduct was free of fraud.
Six months after Jason’s “training” began, the job promised remains illusive.
Jason seems stressed, and shows signs of doubt. “Money’s down,” he says. “If I
don’t get more investors, the whole thing could fall apart. Maybe it will anyway.”
He doesn’t pay rent, meals are provided, and there seems to be some type of
“training,” but...
Without a fiduciary relationship, there is a usual presumption against fraud and favoring the
existence of honest, fair dealing. In nonfiduciary cases, fraud must be proven by the
preponderance of the evidence. Courts will often consider and rule based on circumstantial
evidence, provided that the evidence proves a clear inference of fraud and not a mere
suspicion or conjecture.
Relief in most fraud cases is a return to the status quo --placing the injured party in a
position as close as possible to where he would have been had the fraud not occurred. In
cases where plaintiffs prove a violation of a duty resulting from a trust or confidential
