Given that transactions do not always proceed smoothly, the law has also prepared for the possibility that one party may be deceived by the other, thus suffering property (and not only) damage. For this reason, it is important for the victim of fraud to know what their rights are, when and under what conditions they can exercise them. This way, they can also avoid the risk of being bound by contracts/clauses that limit or even exclude their rights without being justified by law.

1.What do we mean by fraud?

In order to limit disputes, the law has provided a clear definition of the concept of fraud. Therefore, any related act that is considered fraud and is thus illegal must include the following elements. More specifically, fraud is considered the act/omission of another that causes deception in the person entering into the contract, such that the latter does not have a clear and correct perception of the facts.

In other words, the contracting party is presented with facts that do not correspond to reality and which aim to influence their will. The concept of facts includes existing situations, not evaluative judgments that anyone could express (e.g., that product X is the best on the market). These situations or facts can refer to the past/present or even the future.

The concept of fraud also includes the concealment of the actual situation as well as facts that would help the contracting party know the truth of the matters. For example, someone who conceals that the item to be sold has a defect commits fraud, provided they know the defect (or even if they could know it based on the circumstances of the case).

2.What are the conditions for fraud to be considered serious by law?

In order to evaluate fraud against someone as ‘serious,’ the law requires certain conditions to be met. Specifically, the person who deceived the contracting party must have intended to deceive them—that is, they must not have been completely negligent and, for this reason, must not have presented as they should have all the details of the contract to be signed/all the characteristics of the item to be purchased.

It is also necessary for the deceived party to have had significant deception regarding the elements presented to them and those they ultimately chose to enter into the contract; if it is about trivial details, the court may consider that it was not fraud against the victim. Furthermore, the contracting party must have been led to enter into the contract/purchase the item solely because of the fraud, without any other act or internal thought intervening that influenced their decision-making more.

Finally, the victim’s ability to perceive the fraud is of great importance, meaning whether they could understand that the item does not have the characteristics that were presented to them/that the contract would be valid under completely different terms from those they signed or thought. In this regard, the victim’s age/educational level/social experiences/familiarity with the perpetrator of the fraud (i.e., whether they knew the perpetrator or had familiarity and therefore trust if it was a relative or friend) are taken into account.

3.Is the deception I had when I was deceived significant?

The deception that the victim of fraud must have for it to be legally considered that they were deceived can take many forms due to the complexity of transactions. Firstly, the law states that if both parties were deceived when forming the contract, then the contract can be annulled, as the parties intended to declare something different from what they ultimately declared. Exceptionally, the contract may still be valid in the actual sense if each party accepts the statement of the other side, as it would apply in reality.

In addition, the law recognizes the deception of the contracting party regarding the characteristics of the person with whom they will enter into a contract or regarding the item they will purchase. This type of deception is considered significant and can constitute fraud, provided that the contracting party’s deception regarding the person or the characteristics of the item was so important that, had they known the truth, they would not have proceeded with the contract or purchased the product. As we can see, this specific issue (with some exceptions) is judged quite subjectively.

Finally, a common category of deception is where the contracting party has a mistaken perception of the facts on their own and, based on this perception, enters into the contract. Clearly, there is no fraud in this case since the contracting party is declaring exactly what they think; the only issue is that their thought does not correspond to reality. This type of deception is irrelevant to the law, and therefore there is no obligation for compensation for the contracting party who was deceived in this way.

4.Is fraud punishable by law?

Due to the significance of the offense of fraud, the law punishes it criminally as well. More specifically, the sanctions imposed when fraud is committed in at least one of the ways described above are as follows:

• The perpetrator of the fraud is subject to imprisonment, which can range from 10 days to 5 years. It should be noted that if the sentence imposed is up to 1 year, it can now be suspended based on the new Penal Code.
• If the property damage caused to the victim by the fraud was particularly significant (this criterion is quite relative in practice), then the penalty provided is imprisonment for at least 3 months and a financial penalty.
• Additionally, if the perpetrator caused property damage to the victim due to the fraud that exceeds €120,000, the court will impose a sentence of imprisonment for up to 10 years and a financial penalty.
• Finally, if the perpetrator committed fraud against the State/municipalities/regions/the European Union, the imposed penalty is imprisonment for at least 10 years (which can go up to 20 years), as well as a financial penalty.
• The amount of the financial penalty is set from €300 to €40,000 when it concerns misdemeanors and from €5 to €120,000 when it concerns felonies. Therefore, depending on the severity of the fraud act, the financial penalty will fall into the corresponding category.
• In order to be punished as the perpetrator of the crime of fraud, one must have actually caused damage to someone else’s property—that is, there must have been a decrease in the active property or an increase in the passive property, meaning the victim’s debts to others due to the fraud.
• It is not necessary for the perpetrator to have acquired the property benefit, meaning the monetary amount from the victim’s property. It is sufficient that they had the corresponding intention to acquire it.

5.What if a third party was deceived?Does anything change in this case?

It is possible that the victim of fraud dealt with someone who was unaware of the facts of the fraud, who, in turn, dealt with the perpetrator of the fraud. In this case, the intermediary person has no responsibility for the fraud and the damage caused to the victim, and thus the contract cannot be annulled, as the latter was not aware/was not supposed to be aware of the perpetrator’s fraud against the victim.

However, things change if the intermediary person, although considered a third party in relation to the contract, knew or should have known the actual facts and thus the perpetration of fraud against the victim—they could have alerted the victim and informed them that, for example, the item being sold does not have the agreed-upon characteristics. In this case, the intermediary person also bears responsibility, so the contract may be annulled, and correspondingly, the intermediary person may be required to provide compensation, as we will see below.

For all of the above to apply, there must be a third party participating in the contract, and the third party must actually be considered as such. More specifically, an employee of an employer/the contractor/those assigned to perform certain tasks, who may be liable by law to others for the damage caused, is not considered a third party in relation to the contract, and therefore all of the above do not apply to them. We have elaborated on this issue in another text, which analyzes the relationship between the third party and the supervisor.

6.Can I be compensated if I fell victim to fraud?

A fundamental option offered by the law to victims of fraud is to seek compensation from the perpetrator. It is understood that the victim can also legally annul the contract they signed while simultaneously receiving compensation. The specific compensation that the victim receives is comprehensive, meaning it includes all the damage they suffered from the contract as well as any other damage that is not covered by the contract.

For example, if the victim was defrauded and signed a car purchase agreement, they can seek compensation for the price (and the deposit) they paid to the perpetrator of the fraud, as well as any expenses they incurred (e.g., fees for a mechanic for a technical inspection of the vehicle/fees for an insurance agent for arranging insurance for the car/payment of road taxes, etc.).

In addition to these amounts, the victim can also request the monetary amounts they lost because they believed they had signed a formally valid contract, while in reality, it was void due to the fraud. That is, if, in the example above, the victim had the opportunity to purchase another car at a better price but signed the contract due to fraud for the first car, they can seek compensation for the difference between the prices of the two vehicles from the perpetrator of the fraud.

7.Is there a chance that I won’t receive compensation as a victim?

Considering that the victim may have contributed to the fraudulent behavior with their conduct, there are cases where, under the law, the compensation that they would normally be entitled to can be reduced or completely limited. A classic case here is when the victim did not demonstrate the necessary diligence required in transactions to prevent fraud on their own, to the extent that this would have been feasible.

Of course, the above measure of diligence depends on many factors, such as the victim’s age, etc. However, there are also objective criteria in place so that the law responds to the needs of transactions. The criteria adopted concern the average person in everyday life, meaning the general rules that most people know today (e.g., consumers are not obligated to pay if they do not receive a receipt/invoice).

For example, if a potential buyer did not conduct a title search for the property and signed the sales contract, they cannot later claim that they were defrauded by the seller, who assured them that the property had no encumbrances. This is because conducting a title search is a necessary step before proceeding with a property transfer, and neglecting it indicates gross negligence on the part of the corresponding buyer.

8.How does the law address frauds related to subsidies through the ESPA program?

Since this phenomenon was quite widespread in Greece for many years, it was necessary for the law to regulate it in order to protect transactions. Specifically, for fraud related to ESPA subsidies, the following provisions apply:

• The submission of incomplete information or the submission of false information and the corresponding supporting documents is punishable, especially if the latter are forged.
• These documents must be submitted for the request of the beneficiary to be approved so that the beneficiary can receive the subsidy, maintain it, or avoid returning it to the public.
• It is also necessary for the beneficiary’s request to have been approved, and thus some of the actions we described above must have taken place.
• If all the elements mentioned are met, the perpetrator of the fraud is punished with imprisonment of at least one year and a monetary penalty.
• The same exact penalty applies to a perpetrator who uses items/materials that are prohibited by the terms of the subsidy, thereby violating the terms of the contract based on which they would receive the subsidy.
• If the amount of the ESPA subsidy exceeds €120,000, then the perpetrator of the fraud is punished with a prison sentence of up to 10 years and a monetary penalty.
• Naturally, the government can seek to recover the amounts it paid to the perpetrator as a subsidy through a lawsuit for unjust enrichment, which we have discussed in another text.

9.How can I annul a contract in which I was defrauded?

As mentioned in the second question, the conditions for fraud are specific, and the law allows the victim to annul the contract they signed if these conditions are met. However, the error that occurred in the victim must have influenced the contract to a certain degree, as we discussed above. If the error of the victim who was defrauded did not significantly impact the contract and the perpetrator fulfilled the contract according to the true intention of the victim, the court has the discretion not to annul the contract, and thus it will remain valid.

Whether the victim’s error was essential or not for the contract will be determined on a case-by-case basis. For example, if the victim signs for the purchase of a property that they believe is within a building plan, but the property is actually outside the plan, this error is considered essential as it essentially restricts the zoning of the property. If the perpetrator deceitfully concealed from the victim that the property is in an out-of-plan zone, it would also constitute a case of fraud.

On the other hand, if the victim mistakenly filled out a private agreement stating they would pay the other party €500,000 in cash when they meant to write €50,000, and the other party ultimately collects €50,000 from the victim, the contract will remain valid since it was executed as the parties actually intended. The issue, therefore, has many nuances that vary depending on the circumstances.

10.Can I receive compensation if the contract is executed?

A final option that the law provides to the victim of fraud is, instead of annulling the signed contract and requiring the parties to return what they received from each other, for the following to occur: the contract remains valid and thus produces legal effects for the parties, while at the same time, the victim of the fraud receives as compensation the difference between the contract that was signed and the contract that the parties should have signed had the victim not been defrauded.

This scenario primarily appears in contract clauses that are usually added “at the last moment” to the contract without one party’s knowledge, resulting in an increase in their obligations towards the other party. In this case, a contract like this would be valid without the clause that one party deceitfully added while defrauding the other (e.g., a penalty clause stipulating that for each day of delay in the delivery of the project, a penalty of €100 will be imposed on the other party, a clause that the other party was unaware of when signing the contract).

Here, it should be noted that if the victim of the fraud chooses the option we described—to allow the contract to operate normally and receive a “small” compensation—then they cannot later annul the contract and demand the full compensation provided by law. After the victim of fraud chooses one of the available options provided to them, they cannot change their mind and switch to another option, as such a move would catch the other party by surprise, which would have reasonably prepared for the execution of the contract/for the payment of compensation to the victim.

Next to the client and his needs.

Athina Kontogianni-Lawyer

The above does not constitute legal advice, and no responsibility is assumed for it. For more information, please contact us.