What Are The Types Of Fraud In Contracts?

Contracts are often so complex that all parties involved in signing them are caught in an endless disagreement. There are many reasons problems arise when you bind yourself into a contract. For one, it is possible for one party to have ulterior motives in creating a contract. Sometimes, the conditions are not properly performed and it will take some sort of judicial relief to resolve the problem. When transactions are found to be fraudulent, the process of putting things in proper legal perspectives seems like a tiring task. Just when you think you got things figured out, you will be confronted by legalities. Since ignorance of the law excuses no one, it is essential to know when a contract can be considered fraudulent. If the following warning signs are present, you know you are not getting a fair bargain. 

Art. 1339. Failure to disclose facts, when there is a duty to reveal them, as when the parties are bound by confidential relations, constitutes fraud. (n)

Art. 1340. The usual exaggerations in trade, when the other party had an opportunity to know the facts, are not in themselves fraudulent. (n)

Art. 1341. A mere expression of an opinion does not signify fraud, unless made by an expert and the other party has relied on the former's special knowledge. (n)

Art. 1342. Misrepresentation by a third person does not vitiate consent, unless such misrepresentation has created substantial mistake and the same is mutual. (n)

Art. 1343. Misrepresentation made in good faith is not fraudulent but may constitute error. (n)

Art. 1344. In order that fraud may make a contract voidable, it should be serious and should not have been employed by both contracting parties.

Incidental fraud only obliges the person employing it to pay damages. (1270)

Art. 1345. Simulation of a contract may be absolute or relative. The former takes place when the parties do not intend to be bound at all; the latter, when the parties conceal their true agreement. (n)

Art. 1346. An absolutely simulated or fictitious contract is void. A relative simulation, when it does not prejudice a third person and is not intended for any purpose contrary to law, morals, good customs, public order or public policy binds the parties to their real agreement. (n)

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Written by : Pinoy Attorney