united-states criminal-law contract-law fraud tort
Is Intentional Immaterial Fraud Legal?
<p>Normally, an element of the tort of fraudulent misrepresentation, the tort of negligent misrepresentation, statutory securities fraud offenses, and a criminal fraud offense based upon a misrepresentation (e.g. perjury) is that the misrepresentation was "material."</p>

<p>One fairly common circumstance in which tort and fraud claims based upon misrepresentations come up is when information is provided on a form or affidavit in connection with a business transaction which contains many required response items, only some of which are material to the parties.</p>

<p>Suppose that the form or affidavit that is completed is true in all respects material to the parties to the transaction (e.g. the representation that the person signing a document has the authority to do so is true), but the form or affidavit contains information in support of that true fact (e.g. detailed information concerning the time and place of execution, and the language of corporate bylaws providing that authority) that are completely and intentionally fabricated.</p>

<p>Has any criminal offense been committed? </p>

<p>Does anyone have a valid basis to bring a tort claim? </p>

<p>Would the conclusion be different if the representation was warranted to be true in a contractual agreement?</p>

<p>If there is no enforceable violation of any law in this situation, is an intentional lie to overcome an artificial bureaucratic hurdle legal? If not, why not?</p>

<blockquote>
  <p>Has any criminal offense been committed?</p>
</blockquote>

<p>Possibly. A person can be guilty of a crime even where all of their actions are factually legal if it was their intention to commit a crime.</p>

<p>If the person provided the supporting information about their authority to sign because they believed that they didn't have it (even though they did) then this is probably fraud.</p>

<p>The only case similar to this that I am aware of is where a driver for an illegal chop shop was instructed to take a car for valuation that they believed was stolen. In fact, the car was legitimately owned by the owner of the chop shop. The person was convicted because they had the intention and carried through the actions to commit the crime of receiving stolen property even though the "crime" was factually impossible. I can see no reason why the same principle would not apply to fraud.</p>

<blockquote>
  <p>Does anyone have a valid basis to bring a tort claim?</p>
</blockquote>

<p>I can't see one. As you say, the untruths are not material and I can't see how damage can flow from them.</p>

<blockquote>
  <p>Would the conclusion be different if the representation was warranted to be true in a contractual agreement?</p>
</blockquote>

<p>It would depend on the terms of the the contract. </p>

<p>Clearly, it would be a breach and as such would entitle the wronged party to 1) damages or 2) to take whatever action the contract allowed for the breach. The obvious question for 1) is: what damages? For 2), you say its a warranty so a breach doesn't justify termination, however, its possible that the contract says some specific action can be taken in response.</p>

<blockquote>
  <p>If there is no enforceable violation of any law in this situation, is an intentional lie to overcome an artificial bureaucratic hurdle legal? If not, why not?</p>
</blockquote>

<p>There is no legal obligation on anyone to tell the truth unless:</p>

<ul>
<li>you are under oath, </li>
<li>someone may suffer harm from the falsehood ("Yes, the bridge is safe"), </li>
<li>it is in pursuit of a crime, or</li>
<li>there is a statutory prohibition (for example, lying on an immigration form).</li>
</ul>

<p>Imagine I buy an expensive picture. The picture is very valuable if it is genuine, and worthless if not genuine. And it is very bad for the price if I cannot <em>prove</em> it is genuine. </p>

<p>If the picture is indeed genuine, but you could only provide faked evidence for it, then it might be worth a lot less because of that. There would be good reason for the buyer to be very unhappy with this and call it 'fraud'. </p>

<p>Of course, in this situation the falsehoods are not immaterial. </p>
