Falsity is an incorrect statement that causes damage to another party, such as a claim of a clean medical history used to obtain health insurance while being aware of a preexisting condition. The victim of the lie can file suit to recover damages and in some cases the crime may also involve government agencies. For legal purposes, the law may distinguish between a known falsity and an accidental one, in recognition of the fact that an inaccurate statement may be the result of lack of knowledge, rather than malice.
Spoken and written communications can both be incorrect. In a situation where one party attempts to profit from a falsity, this fraudulent activity can be grounds for legal penalties. It is possible to take the liar to civil court for damages, and it could become a criminal matter as well. For example, a counterfeiter passes false currency or merchandise, causing civil damages to businesses, and also violating criminal laws against counterfeiting.
In some situations, an accidental falsity may not be grounds for legal action, as long as the person who commits it can demonstrate that it was made in error. If the error is discovered and the party fails to correct the statement, the situation can change. To protect themselves from falsity charges, members of certain professions may qualify their statements; a real estate agent, for example, wouldn't say, “This home has no termites,” but she could say, “To the best of my knowledge, this home has no termites.”
False declarations made for fraudulent purposes can cause considerable damages. If a contract is based on a falsity, the other party can withdraw without penalty and may seek legal damages to compensate it for losses. Insurance is the classic example, but other types of contracts can include fraud as well. If a homeowner discovers that a contractor does not have a license and represented himself with a false license number, for instance, a contract for construction services can be canceled without penalty.
In any situation where it is necessary to make a statement about a factual matter, it is important to consider the question or prompt carefully and respond appropriately. If the answer is not known, “I don't know” is an acceptable answer, and can prevent a charge of fraud in the future. It is also acceptable to qualify the statement. If an error is made, every step should be taken to correct it as soon as possible, as an unaddressed error may be considered a falsity if it becomes clear that the party who made the error knew this but didn't fix it.
