A statement told with complete awareness that the other person knows the statement to be false. This type of lie is often told and accepted to avoid the fallout that might occur from dealing with reality.
Your friend: I heard your gf busted you at Nikki's last night.
You: Yeah, but it's not problem. She's so whipped that a simple red lie did the trick.
Your friend: Dude, she has no spine.
You: Hells yeah!