Fraud is where a person deceives another person in order to gain some financial or other advantage.

There are two main categories of fraud.

Fraud by false representation is where a person:

• makes a false representation to another person knowing that the representation is, or might be, untrue or misleading; and
• intends, by making that representation, to make a gain or to cause a loss.

Fraud by failing to disclose information is where a person:

• fails to disclose to another person information which they are under a duty to disclose, and
• intends, by failing to disclose the information, to make a gain or to cause a loss.

The following general principles apply to the above categories:

• A representation is any statement made to influence opinion or action. 
• The representation may be express or implied, and may be oral or written (e.g. a statement in a contract claim, letter, e-mail, invoice, meeting etc.). 
• A representation is false if it is untrue or misleading.
• A person will normally be under a duty to fully disclose all relevant information in relation contractual issues with a financial or quality consequence; e.g. claims for payment, variations and extensions of time.
• The gain or loss may be financial or non-financial, and may be for the benefit of the person making the representation or for another person.
• Both the organisations and the individual employees involved in the fraud may be liable.

Examples: 

• A concrete supplier knowingly supplies a client with concrete which is of a cheaper and inferior specification than is contractually required, but invoices the client for concrete of the contractually required specification. The invoice therefore contains a false representation that the concrete supplied was of the required specification. 
• A contractor is contractually entitled to claim an extension of time and additional cost from the project owner in the case of a delay which is the project owner’s fault.  The contractor submits a claim for additional cost to the project owner based on delays allegedly caused by the project owner, but knowingly withholds evidence that the contractor was partially responsible for these delays.
• In order to obtain employment, an applicant for the post of contract manager states in a job application that they have previously worked as a contract manager when in fact they have never held such a position.
• In making a claim from their employer for reimbursement of expense for business travel by car, an employee exaggerates the distance travelled so as to receive a higher payment.

Avoiding fraud: 

To be liable for fraud, you will normally need to have known that your representation was false (i.e. a deliberate act), or to have known that it might be false (i.e. a reckless act, where you know that the information might be false, but fail to take reasonable steps to determine that the information is accurate).

You are unlikely to be liable if you make a false representation which you honestly believed to be true (i.e. an innocent act).  However, if the belief in a representation’s accuracy is implausible, then an investigator or judge may not accept that the belief was genuine.

Therefore, never make any oral or written representation in connection with your work unless you honestly believe it is true. If you make a representation and are not sure whether it is true, then you should explain this as part of the representation.

If you make a representation and later discover that you have made a mistake, inform the other party as soon as possible of the mistake. Otherwise you could be liable for fraudulently allowing the false representation to remain in place, while knowing it is false.

You should also always fully disclose all relevant information which you are under a duty to disclose, particularly if failure to do so may mislead the other party.

If you know or suspect that an activity involves fraud, then avoid or withdraw from the activity and do not assist it in any way.