Research Handbooks in Financial Law series
Edited by Barry Rider
Chapter 28: Theory of fraud in French law: fraus omnia corrumpit – old law, new opportunities?
The Latin adage fraus omnia corrumpit encapsulates what (we think) we know about fraud – its distinctive feature lies in its effects which per se must be negated as “fraud vitiates everything”. The reprehensible nature of fraud justifies the drastic remedy of unenforceability, or even voidability, of the fraudulent contract or act, thus confirming the moral precept that underlies law (or right) that is to discourage and condemn any wrongdoing and provide redress. Despite the reprehensible nature of fraud, very few countries have defined a general statutory theory of fraud. French and English law are no exception. In these two legal systems, among others, the notion of fraud has not been defined and does not trigger a single cause of action known as civil or commercial fraud. However, in the absence of a statutory definition, courts have used the adage fraus omnia corrumpit in order to enjoin parties involved in legal relationships to act honestly, but what is the legal nature of this principle in French law? More specifically, what is the concept of fraud that this principle supports? This is what will be discussed in this chapter. The French Civil Code does provide for legal actions in specific and limited cases of fraud and attaches to them a variety of effects.
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