Summary
Highlights
Failure to disclose facts where there is a duty to reveal them (e.g., in confidential relations) constitutes fraud. This is treated as misrepresentation, allowing the misled party to annul the contract, regardless of intent. A duty to disclose and the other party being misled are required for fraud by concealment.
Normal exaggerations in trade are not considered fraudulent if the other party had the opportunity to know the facts. Sellers are allowed some latitude in promoting products; buyers are expected to exercise independent judgment. However, false statements of fact that mislead a buyer can still constitute fraud.
An expression of opinion generally does not signify fraud unless it is made by an expert and the other party relied on that expert's special knowledge, which later proves false or erroneous.
Misrepresentation by a third person does not vitiate consent unless it creates a substantial and mutual mistake. If the third person acts with the connivance or knowledge of the benefited party, it is deemed fraud by that party. Force by a third person can still make a contract voidable.
If false information is given honestly, believing it to be true, it is not treated as fraud but as a mistake. The contract may be annulled, but liability is for error, not fraud. Key elements include honest belief, absence of intentional deception, and the statement being considered an honest mistake.
Causal fraud, which seriously influences consent, makes a contract voidable. Incidental fraud does not make the contract voidable but obliges the fraudulent party to pay damages. The distinction lies in whether the fraud was the principal inducement to enter the contract.
Simulation occurs when parties pretend to enter into a contract to deceive others, creating a mere appearance of agreement without true intention. Absolute simulation (no intention to be bound) makes a contract void. Relative simulation (parties conceal a real agreement behind another) makes the simulated contract void, but the hidden real agreement may be valid if it meets legal requirements.
The object of a contract can be anything within the commerce of man, including future things, or rights that are transmissible, or services not contrary to law, morals, good customs, public order, or public policy. Public property and intransmissible rights (like the right to vote) cannot be objects of a contract. Future inheritance cannot be the object of a contract, with specific exceptions authorized by law.
Impossible things or services cannot be the object of contracts, rendering such contracts void. Impossibility can be physical (absolute, no one can perform; or relative, depends on conditions/qualifications) or legal (prohibited by law, morals, etc., even if physically possible).
The object of a contract must be determinate as to its kind or at least determinable without needing a new agreement. The quantity does not need to be fixed at the time of agreement as long as it can be determined later. An indeterminate or vague object makes the contract void.