In contract law, what is "fraud"?

Fraud in contract law refers specifically to the intentional misrepresentation of a material fact. This means that one party deliberately provides false information with the intent to deceive another party. The key elements of fraud involve the misstatement of a fact that is significant to the contract, the intention to deceive, and the reliance of the other party on that misrepresentation, which leads to a detriment or harm.

Understanding that fraud requires an intentional act is crucial as it distinguishes it from other forms of misrepresentation, such as unintentional misinformation or mistakes regarding contract terms, which do not carry the same level of culpability or legal consequences. When a party engages in fraud, it undermines the foundation of trust and fairness that is essential in contract negotiations, potentially leading to rescission of the contract or damages for the injured party.