Fraud by failing to disclose information is where person A:

• dishonestly fails to disclose to person B information which Person A is under a duty to disclose, and
• intends, by failing to disclose the information, to make a gain or cause loss.

The duty to disclose may arise for a number of reasons.  For example, it may arise from:

• the express or implied terms of the bid documents (i.e. the bid documents require the bidders to provide complete and accurate information in their bids)
• the transaction in question being one of the utmost good faith (such as an insurance contract)
• a fiduciary relationship (e.g. agent and principal).

In cases where there may not be a duty to disclose information, then failing to disclose could constitute fraud by false representation if the failure to disclose makes a representation false (e.g. if disclosing the information would make the recipient of the information likely to act differently).

The person failing to disclose must be acting dishonestly not innocently (i.e. they must be aware that they should be disclosing certain information, and that disclosure may make the other party act differently).

Examples

An example of fraud by failing to disclose information during the procurement phase is as follows:

• the bid documents require the bidders to disclose fully and accurately the requested information about their experience
• the requested information includes details of corruption convictions
• the bidder deliberately or recklessly fails to disclose in its bid that one of its subsidiaries or directors has been convicted of corruption
• the bidder is aware that if they did disclose this information, they may be disqualified from the bid.