This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
It is difficult to frame a definition of constructive fraud which will at once be accurate and include all that the legal concept embraces. The rules of constructive fraud have been developed by courts in cases in which they have refused to frame definitions of fraud, or to be controlled in giving relief by specific and definite rules in regard to fraud.1 Other facts intensify the difficulty. Unlike one another as the extreme types of fraud, duress, and incapacity may be, there are many cases in which dishonest and inequitable conduct which may not amount to actual fraud, coupled with an amount of moral compulsion which may not amount to technical duress, is brought to bear, either on a person who is of feeble capacity, though not suffering from actual insanity or imbecility, or else upon a person who reposes especial trust and confidence in the adversary party to the contract. In cases like this it may be as easy to see that the contract ought not to be enforced as it is difficult to lay down a general principle stating the exact combination of facts which induced the court to give relief in that particular case, and which it will apply in the future to similar cases. When the propriety of granting relief is clear, it is not always necessary under our system of jurisprudence to classify the case carefully as one of constructive fraud or undue influence. Furthermore, the doctrines of constructive fraud have grown by piecemeal. Particular classes of cases have been recognized by the courts as referable to constructive fraud, long before the general principles underlying the particular classes of cases have been worked out into accurate forms of statement. While such a state of affairs is always to be regretted, it is inevitable under a theory of the law which restricts the power and jurisdiction of its courts to deciding the specific case then on trial, and makes impossible an official and authoritative statement of the general principles which the courts are ready to apply to other cases not before it. A further source of difficulty is that courts and text-writers have included under constructive fraud classes of cases that have no connection with it. One of the clearest and profoundest of writers has included under the head of constructive fraud, illegal contracts.2 Fraud, actual or constructive, is operative only when it affects offer and acceptance, making the agreement thus apparently reached either void or voidable. Illegal contracts are unenforceable solely on account of their subject-matter. It is perfectly possible, and usually the case, that in an illegal contract, offer and acceptance result in a perfect meeting of the minds, though on a subject-matter about which the law does not allow parties to contract. A tentative definition of constructive fraud is, however, a necessity. The following may be suggested: Constructive fraud consists of such acts or omissions, not amounting to actual fraud, as on account of the peculiar relations of the parties to the contract render the contract induced thereby as unenforceable as actual fraud would have made it.3
1Meldrum v. Meldrum, 15 Colo. 478, 11 L. R. A. 65, 24 Pac. 1083.
"Fraud being infinite, chameleon-hued, protean-shaped, no court of equity has ever been so unwise as to give rope to fraud-doers by laying down a hard-and-fast definition of it, thereby enabling scamps to work at will outside the lines of the definition. To the contrary, fraud is left undefined except in the most flexible general way, so that it may meet the mould and pressure of the facts of the concrete case. But there can be no fraud of a grantee against a grantor in the sense of a court of equity unless there are 'acts, omissions and concealments which involve a breach of legal or equitable duty, trust or confidence, justly reposed' and are injurious to the grantor or by which 'an undue and unconscientious advantage is taken of grantor." Lee v. Lee, 258 Mo. 599, 167 S. W. 1030.