Legal Definition and Related Resources of Constructive Fraud
Meaning of Constructive Fraud
Transactions that result in consequences which in equity are similar to fraud . actual dishonesty of purpose is not an ingredient of constructive fraud for if it were it would be simply fraud. Often found in cases of improvidence and want of independent advice . A person who has misconceived the extent of his equitable obligations may be guilty of constructive fraud. Generally arises where relationship between parties appears to be of such character as to render it certain that they do not deal on terms of equality but there is strength on one side, from superior knowledge of matter derived from fiduciary relationship, from overmastering influence and there is weakness, dependence or trust justifiably reposed by the other and unfair advantage results as a result of such relationship. See Greenfield v Greenfield, 123 N.Y.S.2d 19.
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Constructive Fraud in Historical Law
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English Legal System: Constructive Fraud
In the context of the English law, A Dictionary of Law provides the following legal concept of Constructive Fraud : (legal fraud)
Any of certain forms of unintentional deception or misrepresentation (Compare fraud). The concept is applied by equity to those cases in which the courts will not enforce or will set aside certain transactions (e.g. contracts) because it is considered unfair or unconscionable for a person to insist on the transaction being completed. This unfairness may be inferred from the terms of the transaction (when these are such that no person with proper advice would have entered the transaction) or from the relationship of the parties (for example, that of solicitor and client or of trustee and beneficiary).