This is where I focus on a legal issue which, while commonplace and basic for most lawyers, has created some confusion for the rest of you.
Fraud in the Factum. What does that mean?
“You got that through fraud!” “You defrauded me!” “He used fraudulent means.”
These are just some of the vernacular ways we have used or heard used issues centering on fraud, but what does fraud actually mean in the legal sense? The answer is not as straightforward as you might think.
First, one must understand that there are a myriad of different definitions of fraud. A quick perusal of any edition of Black’s Law Dictionary bears this out: constructive fraud, fraud on the market, actual fraud, fraud in the inducement, and bank fraud are among the many different forms of fraud found there.
Fraud in the Factum, as found in Black’s Law Dictionary, is said to be fraud occurring when a legal instrument as actually executed differs from the one intended for execution by the person who executes it, or when the instrument may have had no legal existence. Compared to fraud in the inducement, fraud in the factum occurs only rarely, as when a blind person sign as mortgage when misleadingly told that it was just a letter.
Fraud in the Inducement, however, differs from Fraud in the Factum. Where the latter focuses on the signer’s actual inability to know legally what the document was that s/he signed, the former, Fraud in the Inducement, focuses rather on the misrepresentation that leads another to enter into the transaction, say a mortgage, with a false impression of the risks, duties, or obligations involved in the transaction.
These two distinct types of fraud, thus, have different legal burdens. Focusing on Fraud in the Factum (which is said to be extremely difficult to prove), the analysis is focused, for example, on matters such as linguistic or literacy barriers, or special circumstances that make it reasonable for the signer to rely on the representations of another. Was the signer educated? Did he speak English? Did he have a reasonable opportunity to obtain legal counsel to help him? Has he ever been involved in a transaction like the current one before?
Needless to say, you can’t prove a Fraud in the Factum claim by using Fraud in the Inducement evidence. The two analyses are not mutually interchangeable but rather distinctly different legal analyses.
Alas, even the definition of the word “fraud” can be deceiving. And now you know.