The word fraud is used ubiquitously and often times speakers will use it when they are referring to having been cheated as a part of a transaction or business relationship. However, not all cheating is fraud–just like not all mammals are lions. And what makes it even more complicated is that every state in the United States will have interpreted the cause of action of common law fraud in their own way with its own nuances and distinctions.
This can be illustrated in the law itself when statutes or caselaw refer to a plaintiff being required to prove actual fraud, which means common-law fraud. [cite]. Common-law Fraud is not terribly complex but it has several very specific elements that must be established and where just one is missing–the entire claim fails.
In Texas, a claim or cause of action for “common-law fraud” requires “[1] a material misrepresentation,”–some caselaw will refer to this element as being two separate elements (e.g., (1a) a material representation, (1b) that was false)–“[2] which was either known to be false when made or was [recklessly] asserted without knowledge of its truth,” “[3] which was intended to be acted upon,” “[4] which was [actually] relied upon,” and “[5] which caused injury”–some caselaw will also refer to this element as being two separate elements (e.g., (5a) damages and (5b) those damages were caused by the misrepresentation). Zorrilla v. Aypcro Constr. II, LLC, 469 S.W.3d 143, 153 (Tex. 2015).
However, common-law fraud has two additional related but separate causes of action: Fraudulent Inducement and Fraud by Non-Disclosure. Fraudulent Inducement “is a particular species of fraud that arises only in the context of a contract and requires the existence of a contract as part of its proof. Zorilla, 469 S.W.3d at 153. Fraud by non-disclosure is “a subcategory of fraud, which occurs when a party has a duty to disclose certain information and fails to disclose it.” Bombardier Aero. Corp. v. SPEP Aircraft Holdings, LLC, 572 S.W.3d 213, 219-20 (Tex. 2019). They are like common-law fraud (or “Fraud” for brevity’s sake) in that some of their elements are similar, but they have their own distinct quirks.
William Knisley, JD, MA 