<P> Contrast this with the situation where a trusted employee signs a check without permission . The employer must still honor the check despite the fact that the check was a fraudulent negotiable instrument . Here, the employer had a reasonable opportunity to avoid the obligation by restricting access to the checks . </P> <P> Fraud in the factum is often contrasted with fraud in the inducement . </P> <Ul> <Li> Fraud in the factum is a legal defense, and occurs where A makes / signs an agreement, but either does not realize that it is supposed to be a contract, or does not understand the nature / content of the agreement, because of some false information that B gave to A. For example, suppose John tells his mother that he is taking a college course on handwriting analysis, and for his homework he needs her to read and sign a pretend deed . If Mom signs the deed believing what he told her, and John tries to enforce the deed, Mom can plead "fraud in the factum ." </Li> <Li> Fraud in the inducement is an equitable defense, and occurs when A enters into an agreement, knowing that it is supposed to be a contract and (at least having a rough idea) what the agreement is about, but the reason A signed / made the agreement was because of some false information that B gave to A. For example, suppose John tells his mother to sign a deed giving him her property, Mom refuses at first, but then John falsely tells her that the bank will foreclose on the property unless she signs it over to him . If Mom signs the deed because of this statement from John, and John tries to enforce the deed, Mom can plead "fraud in the inducement ." </Li> </Ul> <Li> Fraud in the factum is a legal defense, and occurs where A makes / signs an agreement, but either does not realize that it is supposed to be a contract, or does not understand the nature / content of the agreement, because of some false information that B gave to A. For example, suppose John tells his mother that he is taking a college course on handwriting analysis, and for his homework he needs her to read and sign a pretend deed . If Mom signs the deed believing what he told her, and John tries to enforce the deed, Mom can plead "fraud in the factum ." </Li>

Fraud in the factum and fraud in the inducement
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