Define: Contract Knavery

Contract knavery refers to dishonest or fraudulent behaviour in the formation, execution, or performance of a contract. It involves deliberate deception, manipulation, or breach of trust by one party to the contract, often to gain an unfair advantage or to exploit the other party. Contract knavery can take various forms, such as misrepresentation of facts, concealment of important information, coercion, duress, or other forms of misconduct aimed at undermining the integrity and enforceability of the contract. This behaviour undermines the principles of good faith, fair dealing, and mutual trust that are essential for the proper functioning of contractual relationships. Contract knavery may give rise to legal remedies, including rescission of the contract, damages, or other forms of relief to compensate the injured party for the harm suffered as a result of the fraudulent conduct.

Putting stipulations or clauses into loan contracts that are disadvantageous to the borrower. The borrower is ignorant of such provisions, and they are sometimes put into place regardless of guarantees and promises of the opposite. Common examples of this include prepayment penalties.

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This glossary post was last updated: 29th March 2024.