Fraud is a common law offence and is defined as:
The unlawful and intentional making of a misrepresentation that causes actual or potential prejudice to another.
This means, therefore, that there is no distinction drawn between corporate or business fraud.
The following elements must be proven to sustain a case of fraud under the common law:
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Misrepresentation
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Unlawfulness
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Actual or potential prejudice
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Intention
The element of Misrepresentation
Misrepresentation is the deliberate distortion or falsification of the truth. Without the required misrepresentation, we are not dealing with fraud but most likely with theft. When property was taken without permission, it is theft and not fraud.
Commercial crime of fraud always starts with a misrepresentation of some kind.
The different forms of misrepresentation in fraud
The misrepresentation can take really any form. It mostly takes the form of the written or spoken word.
- It can be something that was said verbally.
- It can be in the form of a document, which in fraud it often is.
- It can be in the form of electronic communication.
- It can be implied through conduct.