What occurs to a contract in most cases of fraud?

In cases of fraud, the contract typically becomes null and void. This occurs because the fundamental element of mutual consent to the terms of the agreement is compromised. Fraud involves misrepresentation or deceit that affects the decision-making process of one party, leading them to enter the contract under false pretenses. As a result, the law recognizes that the injured party did not genuinely agree to the terms, and thus the contract lacks the necessary validity.

When a contract is voided due to fraud, it means that neither party is bound by the agreement, and they are relieved from their contractual obligations. This serves to protect the party that was misled and upholds the integrity of contractual agreements by discouraging fraudulent practices.

Other options, such as penalties or automatic renewal, do not apply in situations of fraud, as the essence of the contract itself is compromised. Similarly, converting the contract into a warranty does not align with the legal consequences of fraudulent behavior; a warranty implies a certain commitment that does not exist under fraud.