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  • Fraud

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    1. Fraud involves the intentional deception of another party through false representations, concealment of facts, or broken promises, in order to gain an unfair advantage or cause a loss. 2. The essential elements of fraud are a false statement knowingly made, loss or damage suffered by the victim, intent for the victim to act on the false statement, deception of the victim, and loss resulting from the victim acting on the deception. 3. While mere silence about facts is generally not considered fraud, there are exceptions when there is a duty to speak, a change in circumstances, deception through silence itself, or conveying only half the truth.

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    1. Fraud involves the intentional deception of another party through false representations, concealment of facts, or broken promises, in order to gain an unfair advantage or cause a loss. 2. The essential elements of fraud are a false statement knowingly made, loss or damage suffered by the victim, intent for the victim to act on the false statement, deception of the victim, and loss resulting from the victim acting on the deception. 3. While mere silence about facts is generally not considered fraud, there are exceptions when there is a duty to speak, a change in circumstances, deception through silence itself, or conveying only half the truth.

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    45 views6 pages

    Fraud

    Uploaded by

    nirav_11388
    1. Fraud involves the intentional deception of another party through false representations, concealment of facts, or broken promises, in order to gain an unfair advantage or cause a loss. 2. The essential elements of fraud are a false statement knowingly made, loss or damage suffered by the victim, intent for the victim to act on the false statement, deception of the victim, and loss resulting from the victim acting on the deception. 3. While mere silence about facts is generally not considered fraud, there are exceptions when there is a duty to speak, a change in circumstances, deception through silence itself, or conveying only half the truth.

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    of 6

    FRAUD

     Meaning:
    The term ‘fraud’ means a false representation of fact made
    willfully with a view to deceive the other party. Section 17 defines
    the fraud as follows:
    1. The suggestion of the fact which is not true and a person making it
    does not believe it to be true.
    Ex:
    X sells to Y locally manufactured good as imported goods
    charging a higher price, it amounts to fraud.
    2. Active concealment of a fact by a person having knowledge or
    belief of the fact.
    Ex:
    X a furniture dealer, conceals the cracks in furniture sold by him
    by using some packing material and polishing it in such a way that
    the buyer even after reasonable examination cannot trace the
    defect, it would tent amount to fraud through active concealment
    3. A promise made without any intension of performing it.
    4. Any such act or omission as the law specially declares to
    be fraudulent.
    Ex: Under Companies act and Insolvency Acts, certain
    kinds of transfers have been declared to be fraudulent.
    5. Any other Act fitted to deceive.
    ESSENTIAL ELEMENTS

     If Party makes false statement knowingly.

     Suffered loss.

     The other party must have been intended to act upon


    the representation.

     The other party must have been deceived.

     Other party acting on false representation must have


    sustained a loss as a consequence.
    “MERE SILENCE AS TO FACT IS NO
    FRAUD”
     According to section 17,”mere silence as to facts likely
    to affect the willingness of a person to enter into a
    contract is not fraud.”
    Ex:
    A sold his horse to B.A knew about the unsoundness of
    the horse. A says nothing about unsoundness of horse.
    This is not fraud in A.

    However, there are certain exceptions to this rule. In such


    cases the silence amounts to fraud.such expectations are
    Stated Under:
    1. Duty to Speak
    When a person is duty bound to speak and instead he
    keeps silence then it is fraud.
    Ex:
    A father knowingly sell unsound horse to his daughter.
    This is a fraud.
    2. Change of circumstances
    Sometime agreement fact is true but Change in the
    circumstances it may be false later on. It is duty of
    party to communicate the change of circumstances.
    otherwise it will be a fraud.
    Ex: Director…..
    3. When Silence itself is deceptive
    Ex:
    A intends to sell his horse to B.B replies that if I don’t
    hear anything from you within seven days, I assume that
    the horse is sound. A didn’t reply at all.
    After buying the horse B feels that horse is not sound.
    This is fraud by A.
    4.Half truth
    Sometimes person starts telling truth but half the way.
    Thus ,half truth is always deceptive. Hence it is fraud.

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