In a contract setting, silent fraud occurs when one party fails to disclose material facts of the contract.  Generally speaking, fraud of any type is prohibited during contract transactions. 

Silent fraud can be somewhat common in contracts claims.  An example of silent fraud is where a car salesman purposely fails to disclose that the odometer in a car has been tampered with.  If the failure to disclose such information causes losses to the other party, they may have a claim for silent fraud. 

How is Silent Fraud Proven?

In order to prove silent fraud in a contract claim, the plaintiff must show that:

  • The defendant failed to reveal or disclose material facts involving the subject matter of the contract;
  • The defendant had knowledge of the material fact or facts;
  • The plaintiff had a false impression due to the defendant’s failure to disclose the facts;
  • At the time of the failure, the defendant had knowledge that the failure to disclose would cause a false impression;
  • At the time of the failure to disclose the facts, the defendant intended that the plaintiff would rely on the false impression;
  • The plaintiff actually relied on the false impression; AND
  • The plaintiff suffered losses as a result of relying on the false impression

Thus, there are many different steps that need to be addressed in order to prove silent fraud.  If any of the elements listed above are not met, the defendant may be able to defend against the claim.

What are the Remedies for Silent Fraud in a Contracts Claim?

If silent fraud occurs, the non-liable party can usually:

  • Rescind (cancel) the contract and be compensated for any consideration (usually money); OR
  • Affirm the contract agreement and sue to receive a damages award (for example, if the contract property has decreased in value).

In some cases involving malicious or criminal intent, criminal charges can be brought against the defendant.  These can result in consequences like criminal fines or even a jail sentence for the defendant. 

Do I Need a Lawyer for Silent Fraud in a Contract Claim?

Contract laws can be very complex, and will also differ from state to state.  If you have any questions or legal issues involving silent fraud, you may wish to present your claim to an experienced contracts lawyer.  Your attorney will be able to discuss your options and can represent you in a court of law during trial.  Many silent fraud claims can get overlooked because the plaintiff wasn’t aware of an omission, so be sure to present your attorney with as many facts as possible.