Fraud: What Constitutes a Case?

FraudIt’s something you hear in the news almost every week – fraud. By the time you get to the sound bites, you hear all about those lawsuits involving thousands of dollars and the victims seeking justice. But, what exactly is fraud? It’s easy enough to define using its dictionary definition, but what are its bounds, from a legal perspective?

To define fraud, it’s important to determine the elements that comprise such a case. Houston defense lawyers say that, under common law, there are nine elements. These, however, can be simplified to three core factors, specifically:

Material False Statement

Fraud begins with the representation of fact in a false light. There has to be something untrue about whatever was said or promised prior to the crime. An untrue statement, however, isn’t enough.

The false statement has to be material – meaning, had you known about the truth, you would’ve decided otherwise. In the bookkeeping industry, this is like an investor deciding not to invest after knowing the risks associated with the move.

Moreover, says there has to be an intent to fool a person. Accidental fraud is not a real thing in the eyes of the law. Plaintiffs have to prove that the suspect did have the motive and objective to commit fraud.

Victim Reliance

Who is the victim of fraud? It is impossible for a case to progress if there is no victim who believed and depended on the material false statement presented. Technically speaking, reliance is when the misrepresentation of facts results in a change of conduct from the plaintiff, which changes the person’s legal relations.


The last major concern is the actual damage done to the plaintiff. There must be some form of damage to the victim if the case is to push through in court. Even if there’s a material false statement and victim reliance has been established, the court will not hear the case if there isn’t any actual or punitive damage.

In its most basic sense, these three factors are the main elements of fraud. But while it is important to know such facts, it’s still better to consult an experienced attorney when facing such a case.