fraud, in law, willful misrepresentation intended to deprive another of some right. The offense, generally only a tort, may also constitute the crime of false pretenses. Frauds are either actual or constructive. An actual fraud requires that the act be motivated by the desire to deceive another to his harm, while a constructive fraud is a presumption of overreaching conduct that arises when a profit is made from a relation of trust (see fiduciary). The courts have found it undesirable to make a rigid definition of the type of misrepresentation that amounts to actual fraud and have preferred to consider individually the factors in each case. The misrepresentation may be a positive lie, a failure to disclose information, or even a statement made in reckless disregard of possible inaccuracy. Actual fraud can never be the result of accident or negligence, because of the requirement that the act be intended to deceive. The question of commission may depend upon the competence and commercial knowledge of the alleged victim. Thus dealings with a minor, a lunatic, a feeble-minded person, a drunkard, or (in former times) a married woman are scrutinized more closely than dealings with an experienced businessman. A lawsuit based upon actual or constructive fraud must specify the fraudulent act, the plaintiff's reliance on it, and the loss suffered. The remedy granted to the plaintiff in most cases is either compensatory (and possibly punitive) damages for the injury or cancellation of the contract or other agreement and the restoration of the parties to their former status. In a few states of the United States both damages and cancellation are available. In certain suits based upon a contract, fraud may be introduced as a defense.

Yazoo land fraud, name given to the sale in 1795 by an act of the Georgia legislature of vast holdings in the Yazoo River country to four land companies following the wholesale bribery of the legislators; the territory comprised most of present Alabama and Mississippi. The companies involved were the Georgia, Georgia Mississippi, Upper Mississippi, and Tennessee companies. Spain's acceptance, in the same year, of lat. 31°N as the northern boundary of West Florida (see West Florida Controversy) enhanced the value of the lands, which had formerly been claimed by Spain, and the companies set about reselling them. However, the corruption that accompanied the passage of the act was soon detected, and in 1796 a newly elected legislature rescinded it. Georgia offered to restore the purchase price to the companies, but large numbers of investors declined to accept payment and pressed their land claims. In 1802, Georgia ceded all its lands W of the Chattahoochee River to the United States for $1,250,000. By the terms of the cession agreement the Yazoo claimants were to receive 5,000,000 acres (2,025,000 hectares) or the money received from their sale, an arrangement they rejected. The Yazoo frauds came to be a vexing issue in national politics. Congress, prodded by John Randolph, declined to give the speculators any relief. But in 1810 the U.S. Supreme Court, in Fletcher v. Peck, held that their land claims were valid since the Yazoo act of 1795 constituted a contract binding on Georgia even though it was conceived in fraud. Bolstered by this decision, the speculators were later awarded more than $4,000,000 by Congress.

In law, the deliberate misrepresentation of fact for the purpose of depriving someone of a valuable possession or legal right. Any omission or concealment that is injurious to another or that allows a person to take unconscionable advantage of another may constitute criminal fraud. The most common type of fraud is the obtaining of property by giving a check for which there are insufficient funds in the signer's account. Another is the assumption of someone else's or a fictitious identity with the intent to deceive. Also important are mail and wire fraud (fraud committed by use of the postal service or electronic devices, such as telephones or computers). A tort action based on fraud is sometimes referred to as an action of deceit.

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(1795–1814) Scheme to sell land in Georgia. After legislators were bribed to sell Georgia's western land claims around the Yazoo River to four land companies for $500,000, public anger forced a newly elected Georgia legislature to rescind the act (1796) and return the money. Much of the land had meanwhile been resold to third parties, who refused the money and maintained their claim to the property. The state ceded its claim to the U.S. in 1802. In 1810 the U.S. Supreme Court ruled that the 1796 rescinding law was an unconstitutional infringement on a contract. By 1814 the U.S. government assumed possession of the territory and awarded the claimants over $4 million.

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