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Legal Memorandum: Elements of a Legal Fraud

Issue: May a claim for fraud succeed when the promise not performed was a promise to act in the future?

Area of Law: Business Organizations & Contracts
Keywords: Fraud; Promise to act in future
Jurisdiction: Alabama
Cited Cases: 164 A.2d 785; 63 N.J. Super. 384; 810 A.2d 137; 54 N.J. Super. 333; 741 A.2d 808
Cited Statutes: None
Date: 07/01/2007

Although “the breach of a promise to do something in the future is not fraud,” and “an unperformed promise does not give rise to a presumption that the promisor intended not to perform when the promise was made,” Bash v. Bell Tel. Co., 601 A.2d 825 (Pa. Super. Ct. 1992), superseded by rule as stated in Keefer v. Keefer, 741 A.2d 808 (Pa. Super. Ct. 1999), there still may be some basis for a fraud claim in this case. 

The elements of legal fraud include a material representation of a presently existing or past fact, made with knowledge of its falsity, with the intention that the other party rely thereon, and that the other party does so rely to his detriment.  Dover Shopping Center, Inc. v. Cushman’s Sons Inc., 63 N.J. Super. 384, 391, 164 A.2d 785 (App. Div. 1960); accord Debbs v. Chrysler Corp., 810 A.2d 137, 155 (Pa. Super. Ct. 2002).  In equitable fraud, the second element (knowledge) need not be shown, but the other four elements are still essential.  As the Bash court also noted, “[a] mere promise to do something in the future, subsequently unfulfilled, does not constitute actionable fraud,” Dover Shopping Center, 63 N.J. Super. at 391, but a promise to do something in the future that the promisor never intended to keep when he made the promise may satisfy the first element of fraud, constituting a material misrepresentation […]

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