Tom Murphy

Hopkins & Huebner

Adel Office

Fraud in Contracts

Sometimes, parties to contracts would like to be released from their obligations.  Parties may want contracts to be voided or revised.  However, once someone has signed a written contract he or she is usually bound to its terms and can be sued for breach of contract for not complying with those terms.

These issues often arise in sales of homes, business deals, and commercial transactions.

It is not that easy to void a contract. Iowa courts assume people read important contracts. In the absence of fraud or mistake, people are bound by their signatures.   The Iowa Supreme Court once said:  “It is also the settled . . . that if a party to a contract is able to read, has the opportunity to do so, and fails to read the contract, he cannot . . .  say that he was ignorant of its terms and conditions, for the purpose of relieving himself from its obligation.”  

In some circumstances contracts may be overturned by courts. For example, contracts may be voided if people entered them because of fraud. To prove fraud one usually has to show that there was: a material misrepresentation; that was made with knowledge of its falsity; an intention to induce a party to do, or refrain from doing, something; justifiable reliance on the misrepresentation; and damages. Sometimes, just not disclosing a material fact can be a fraudulent misrepresentation.

While it seems simple in black and white, fraud is not that easy to prove. To void a contract for fraud  the Iowa Supreme Court once said there ought to be  “some trick or artifice practiced by the opposite party” involved.

To avoid being in a situation where one feels fraud has been committed or is being accused of fraud, one should have contract carefully prepared that completely covers the subject of the contract.  Most importantly, contracts should be read, and re-read before they are signed.