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Posted on August 17th, 2012, by

Frauds have a negative impact on relationships between people, regardless of the field where frauds occur. Today, it is possible to distinguish different types of frauds, such as fraud in the inducement and fraud in the inception.

However, frauds are treated in a different way. If the fraud in the inducement is treated as a personal defense than the fraud in the inception is treated as a real defense because the former occurs when an individual’s consent is obtained in the result of his or her deception, while the latter occurs when an individual does not even intend to sign a contract.

On analyzing the difference between the fraud in the inducement and the fraud in the inception, it is possible to refer to specialists who clearly distinguish the fraud in the inducement and the fraud in the inception:

Fraud in the inducement occurs when a person knows what he or she is signing but consent is induced by the fraud of another. Fraud in the inception happens when a party is deceived concerning the nature of his or her acts and does not know what he or she has signed and does not intend to enter into a contract (McKendrick, 2005, p.236).

 

Hence, the fraud in the inducement can be treated as personal defense because an individual understands the essence of the contract he or she is signing. Therefore, the decision is taken by an individual in person. In contrast, in case of the fraud in the inception, an individual does not know essence of the contract, and is not fully responsible for his or her actions because he or she is deceived by others. Consequently, it is the real defense as an individual needs to protect his or her interests and he or she cannot be responsible for the contract he or she signed in person. In other words, the distinction between the two types of frauds is grounded on the fact of the personal choice or decision made by an individual when he or she signs a contract, even if he or she is influenced by another person that is the case of the fraud in the inducement, while the fraud in the inception makes such a personal choice or decision impossible because an individual is unaware of what he or she is actually signing. In fact, the fraud in the inception is a real defense because a party that is forced to sign a contract do it in face a threat to his/her personal well-being, health, etc. (Peters, 2002). In other words, he/she defends him-/herself and his/her position, family, etc. The distinction between the fraud in the inducement and the fraud in the inception is justifiable partially because they are different in their essence but still it is necessary to remember that an individual should be responsible for his or her actions and be careful when he or she is signing a contract that is applicable to both frauds and closes the gap between them.

Thus, in conclusion, it should be said that it is possible to distinguish the fraud in the inducement and the fraud in the inception. They are different in personal, conscious involvement of an individual in either fraud. This difference is the ground for their distinction.

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