It is not uncommon for a business owner to be the target of a fraudulent
scheme, or to be accused of committing fraud. Manifesting in several contexts,
all fraud is identical at its core. Fraud is generally defined as an intentional
misrepresentation of a material existing fact made by one person to another
with knowledge of its falsity and for the purpose of inducing the other
person to act, and upon which the other person relies with resulting injury
Consequently, any fraud case involves three basic issues: 1) When the fraud
was discovered; 2) The context of the alleged fraud; and 3) Whether there is fraud.
When the fraud was discovered
When the fraud was discovered is important because of the “
discovery rule” for fraud, stating generally, the statute of limitations on a claim
involving fraud does not begin running until the fraud is, or should have
been discovered, which may be well after the damage occurs.
The context of the alleged fraud
While the discovery rule tolls the
statute of limitations (that is, keeps the statute of limitations from running on the clam until
it is discovered), the rule does not enlarge the statute of limitations.
Once the fraud is, or should have been discovered, the statute of limitations
on the underlying claim (contract, tort, wrongful death, etc…)
For example, Nebraska generally has a five year statute of limitations
for civil actions (law suits) on a written contract. This means a person
has up to five years from the date she enters into a contractual agreement
to file a claim for breach of contract. However, if the fraud was formed
as part of a fraudulent scheme did not discover the fraud until a year
after damages accrued, the statute of limitations would not start running
until that the bracelet hit you in the head.
Whether there is fraud
Finally, it is important to note the discovery rule does not apply unless
the transaction in question is
deemed fraudulent. In the bracelet example, if you purchased the bracelet from a seller
who thought he was selling you a genuine silver Tiffany bracelet, it would
likely not be considered a fraud claim because the seller did not intentionally
perverse the truth. In such event, the statute of limitations began running
on the date the bracelet was purchased.
The laws concerning fraud are a valuable tool in that they equitably preserve
the possibility of legal action against a person who engages in less than