What is "silent fraud"? | Rottenstein Law Group LLP

Posted: May 9, 2016 at 6:18 pm

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Silent fraud is a type of fraud in which the plaintiff claims that the defendant kept silent about an important fact in order to lead the plaintiff to believe the opposite of that fact was true. In essence, silent fraud and standard fraud are the same tort, except that silent fraud involves lying by omission rather than making an untrue statement.

In order to prove silent fraud, the plaintiff must prove that:

In silent fraud cases, a material fact is a past or present fact that can be proven or disproven. It is not a promise, a speculation, or a future possibility.

For instance, suppose that the plaintiff is considering buying a house from the defendant. The defendant knows that the pillars holding up the porch roof were damaged by termites last year, but never repaired. The termite damage is a material fact because it can be observed and would affect the plaintiffs desire to buy the house if she knew about it, so the defendant may be held liable if the fact of the termite damages later causes injury or loss for the plaintiff.

However, if the defendant did not know the termite damage existed but merely speculated that it might because the house next door had once had termites, that speculation would not be a material fact, and the defendant would probably not be liable for failing to tell the plaintiff about his guess.

In some courts, the plaintiff must also prove that the defendant had a duty to disclose the fact that he kept silent about. The duty to disclose creates a responsibility to tell the plaintiff the truth, rather than to keep silent and let the plaintiff believe whatever she wants. If the defendant fails to keep up with this responsibility and the plaintiff suffers harm as a result, the defendant may be liable for damages.

A duty to disclose exists in many types of business transactions and other situations in which a failure to disclose could lead to serious physical or financial harm to another person. For instance, a person selling a house in many states has a duty to disclose serious hazards that could cause injury or illness, like insect infestations, broken steps, or a roof that is caving in.

Not all U.S. state courts recognize silent fraud as a separate tort. These courts typically combine fraud and silent fraud into the same cause of action, allowing a plaintiff to bring a case for fraud whether the falsehood involved was an affirmative lie or an omission. Other courts, however, separate the two types.

Unlike most civil law claims, silent fraud and other types of fraud must generally be proven by clear and convincing evidence. This burden of proof is a higher standard than the preponderance of the evidence required in most civil law cases.

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What is "silent fraud"? | Rottenstein Law Group LLP

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