California Jury Instruction CACI 335 Affirmative Defense—Fraud

335. Affirmative Defense—Fraud

[Name of defendant] claims that no contract was created because [his/her/ nonbinary pronoun/its] consent was obtained by fraud. To succeed, [name of defendant] must prove all of the following:

1. That [name of plaintiff] represented that [insert alleged fraudulent statement];
2. That [name of plaintiff] knew that the representation was not true;
3. That [name of plaintiff] made the representation to persuade [name of defendant] to agree to the contract;
4. That [name of defendant] reasonably relied on this representation; and
5. That [name of defendant] would not have entered into the contract if [he/she/nonbinary pronoun/it] had known that the representation was not true.

If you decide that [name of defendant] has proved all of the above, then no contract was created.

New September 2003

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Nakase Wade | California Business Lawyers & Corporate Lawyers

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Directions for Use

This instruction covers intentional misrepresentation under the first alternative presented in Civil Code section 1572. The other types of fraud that are set forth in section 1572 are negligent misrepresentation, concealment of a material fact, and false promise.

If the case involves an alleged negligent misrepresentation, substitute the following for element 2: “That [name of plaintiff] had no reasonable grounds for believing the representation was true.”

If the case involves concealment, the following may be substituted for element 1: “That [name of plaintiff] intentionally concealed an important fact from [name of defendant], creating a false representation.” See CACI No. 1901, Concealment, for alternative ways of proving this element.

If the case involves a false promise, substitute the following for element 1: “That [name of plaintiff] made a promise that [he/she/nonbinary pronoun/it] did not intend to perform” and insert the word “promise” in place of the word “representation” throughout the remainder of the instruction.

Sources and Authority

• When Consent Not Freely Given. Civil Code sections 1567, 1568.
• Actual Fraud. Civil Code section 1572.

• Fraud can be found in making a misstatement of fact, as well as in the concealment of a fact: “Actual fraud involves conscious misrepresentation, or concealment, or non-disclosure of a material fact which induces the innocent party to enter the contract.” (Odorizzi v. Bloomfield School Dist. (1966) 246 Cal.App.2d 123, 128 [54 Cal.Rptr. 533].)
• Fraud may be asserted as an affirmative defense: “One who has been induced to enter into a contract by false and fraudulent representations may rescind the contract; or he may affirm it, keeping what he has received under it, and maintain an action to recover damages he has sustained by reason of the fraud; or he may set up such damages as a complete or partial defense if sued on the contract by the other party.” (Grady v. Easley (1941) 45 Cal.App.2d 632, 642 [114 P.2d 635].)
• “It is well established that a defrauded defendant may set up the fraud as a defense and, in fact, may even recoup his damages by counterclaim in an action brought by the guilty party to the contract. The right to avoid for fraud, however, is lost if the injured party, after acquiring knowledge of the fraud, manifests an intention to affirm the contract.” (Bowmer v. H. C. Louis, Inc. (1966) 243 Cal.App.2d 501, 503 [52 Cal.Rptr. 436], internal citations omitted.)

Nakase Wade | California Business Lawyers & Corporate Lawyers

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Secondary Sources

1 Witkin, Summary of California Law (11th ed. 2017) Contracts, §§ 286-309

17 California Forms of Pleading and Practice, Ch. 215, Duress, Menace, Fraud, Undue Influence, and Mistake, §§ 215.70-215.72, 215.144 (Matthew Bender)

9 California Points and Authorities, Ch. 92, Duress, Menace, Fraud, Undue Influence, and Mistake, § 92.40 et seq. (Matthew Bender)

27 California Legal Forms, Ch. 77, Discharge of Obligations, § 77.353 (Matthew Bender)

1 Matthew Bender Practice Guide: California Contract Litigation, Ch. 8, Seeking or Opposing Equitable Remedies in Contract Actions, 8.24

1 Matthew Bender Practice Guide: California Contract Litigation, Ch. 17, Attacking or Defending Existence of Contract—Fraud, Duress, Menace, and Undue Influence, 17.03-17.09, 17.12-17.18