Example:

A sub-contractor installs a waterproof roof membrane under a contract with a contractor.  The membrane is accidentally perforated in several places by the sub-contractor’s personnel during installation, which means that it is likely to leak.  The membrane should therefore be rejected and replaced, or appropriately repaired if repair would render the membrane in accordance with the contract.  The contractor’s site supervisor does not notice the perforations.  Replacing or repairing the membrane would delay handover of the roof back to the contractor (which could result in a delay claim by the contractor against the sub-contractor), and would result in additional labour and material cost for the sub-contractor.  The sub-contractor decides not to replace or repair the damaged membrane, or to disclose the perforations to the contractor or the project owner, and proceeds to install the roof cladding over the membrane.  The membrane is therefore covered over by the roof cladding, so can no longer be seen or inspected.  The sub-contractor claims payment from the contractor for the waterproofing works on the basis that they are properly completed.

Explanation:

The sub-contractor knows that the membrane is defective.  The sub-contractor is committing fraud by not replacing or repairing the membrane, and by billing the contractor on the basis that the works are in accordance with the contract.  The sub-contractor should either have replaced or repaired the membrane, or should have disclosed the issue to the contractor and agreed a consequent course of events with the contractor.