What is the difference between actual fraud and constructive fraud?
Actual fraud in a business transaction can occur with significant misrepresentations on which the other party relies or with concealing important facts from the other party. These wrongful acts show fraudulent intent. On the other hand, constructive fraud is found in certain circumstances where the intent is not important. For example, if a man with numerous creditors makes a gift of all of his valuable property to his wife or his children, an Alabama court may void the gift under a theory that the man committed constructive fraud against his creditors even if he did not specifically intend to do so. Proof of his actual intent or that he knew his creditors would suffer may not be necessary.
