Learning Outcomes
After studying this article, you will be able to identify and explain the three main fraud offences under the Fraud Act 2006, including their actus reus and mens rea elements. You will understand what constitutes a false representation, a legal duty to disclose, and abuse of position. You will also be able to apply the legal test for dishonesty and recognise the main defences relevant to fraud, as required for SQE1.
SQE1 Syllabus
For SQE1, you are required to understand the elements and defences relating to fraud offences under the Fraud Act 2006. Focus your revision on:
- the three principal fraud offences: fraud by false representation, fraud by failing to disclose information, and fraud by abuse of position
- the actus reus and mens rea for each fraud offence, including the legal meaning of dishonesty
- the application of the Ivey test for dishonesty
- the meaning of "gain" and "loss" in fraud
- the main available defences to fraud, including absence of dishonesty and claim of right
Test Your Knowledge
Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.
- What are the three ways in which fraud can be committed under the Fraud Act 2006?
- What is the legal test for dishonesty in fraud offences?
- When does a failure to disclose information amount to fraud?
- Name two possible defences to a charge of fraud.
Introduction
Fraud is a single offence under the Fraud Act 2006, but it can be committed in three distinct ways: by false representation, by failing to disclose information, or by abuse of position. Each method targets dishonest conduct intended to make a gain or cause a loss. For SQE1, you must be able to identify the actus reus and mens rea for each fraud offence, apply the legal test for dishonesty, and recognise the main defences that may arise.
Fraud under the Fraud Act 2006
The Fraud Act 2006 replaced a range of older deception offences with a single, flexible offence of fraud. Fraud can be committed in three ways:
- fraud by false representation (s 2)
- fraud by failing to disclose information (s 3)
- fraud by abuse of position (s 4)
Each offence requires both a prohibited act (actus reus) and a guilty mind (mens rea).
Fraud by False Representation
A person is guilty of fraud by false representation if they dishonestly make a false representation, intending to make a gain for themselves or another, or to cause loss to another or expose another to a risk of loss.
Key Term: false representation
A statement or conduct that is untrue or misleading, made expressly or impliedly, about fact, law, or state of mind.
A representation can be made in words, writing, conduct, or even to a machine (such as using a stolen bank card at an ATM). The representation must be false, and the defendant must know it is, or might be, false or misleading.
Key Term: representation
Any communication, express or implied, about fact, law, or state of mind, made to another person or to a machine.
The prosecution must prove:
- the defendant made a false representation
- the defendant acted dishonestly
- the defendant intended, by the representation, to make a gain or cause a loss
Key Term: dishonesty
Conduct that ordinary decent people would consider dishonest, judged objectively after establishing the defendant’s actual knowledge or belief as to the facts (Ivey test).Key Term: gain or loss
Gain includes keeping what one has or obtaining something new; loss includes not getting what one might get or losing something one has. Both can be temporary or permanent.
Worked Example 1.1
Question:
Jasmin advertises a laptop for sale online, claiming it is new and unused. She knows it is second-hand and faulty. She sells it to Alex for full price. Has Jasmin committed fraud by false representation?
Answer:
Yes. Jasmin made a false representation about the laptop’s condition, acted dishonestly, and intended to make a gain for herself by selling it at full price.
Fraud by Failing to Disclose Information
A person is guilty of fraud by failing to disclose information if they dishonestly fail to disclose information they are under a legal duty to disclose, intending to make a gain or cause a loss.
Key Term: legal duty to disclose
An obligation to provide information arising from statute, contract, or a fiduciary relationship.
The prosecution must prove:
- the defendant was under a legal duty to disclose information
- the defendant failed to disclose that information
- the defendant acted dishonestly
- the defendant intended to make a gain or cause a loss
Worked Example 1.2
Question:
Omar applies for car insurance but fails to mention a recent driving ban, which he is required to disclose. He does so to obtain cheaper insurance. Is this fraud by failing to disclose?
Answer:
Yes. Omar had a legal duty to disclose the ban, failed to do so dishonestly, and intended to make a financial gain.
Fraud by Abuse of Position
A person is guilty of fraud by abuse of position if they occupy a position in which they are expected to safeguard, or not act against, the financial interests of another, and dishonestly abuse that position, intending to make a gain or cause a loss.
Key Term: abuse of position
Using a position of trust to act dishonestly against the financial interests of another.
Positions of trust include employees, trustees, agents, or carers. Abuse can be by act or omission.
The prosecution must prove:
- the defendant occupied a position of trust
- the defendant abused that position
- the defendant acted dishonestly
- the defendant intended to make a gain or cause a loss
Worked Example 1.3
Question:
Priya is a care worker for an elderly client. She uses the client’s bank card to withdraw money for herself, without permission. Has Priya committed fraud by abuse of position?
Answer:
Yes. Priya was in a position of trust, abused that position dishonestly, and intended to make a gain.
The Test for Dishonesty
The legal test for dishonesty is set out in Ivey v Genting Casinos [2017] UKSC 67. The court must:
- Ascertain the defendant’s actual knowledge or belief as to the facts.
- Decide whether, by the standards of ordinary decent people, the conduct was dishonest.
The defendant’s own view of whether their conduct was honest is irrelevant.
Exam Warning
The Ivey test is objective. Do not confuse it with the old Ghosh test, which included a subjective element. For SQE1, always apply the Ivey approach.
Gain and Loss
For all fraud offences, the defendant must intend to make a gain or cause a loss. Gain and loss are defined broadly and include keeping what one has, obtaining something new, or preventing another from obtaining something.
Defences to Fraud
There is no statutory defence specific to fraud, but the following general defences may apply:
- Absence of dishonesty: If the defendant genuinely believed they were acting honestly, they may not be guilty.
- Claim of right: If the defendant honestly believed they had a legal right to the property or gain, this may negate dishonesty.
- Duress: If the defendant was compelled to act by threats of serious harm, duress may be available.
Worked Example 1.4
Question:
Samira takes back a bicycle she believes is hers, but it actually belongs to someone else. She is charged with fraud by false representation for claiming ownership. Is she guilty?
Answer:
If Samira honestly believed she had a legal right to the bicycle, she is not dishonest and cannot be guilty of fraud.
Revision Tip
For fraud, always check if the prosecution can prove both dishonesty (using the Ivey test) and intent to make a gain or cause a loss. If either is missing, the offence is not made out.
Summary
| Fraud Offence | Actus Reus | Mens Rea (Guilty Mind) |
|---|---|---|
| False representation | Making a false representation | Dishonesty, intent to gain/cause loss |
| Failure to disclose info | Failing to disclose when under a legal duty | Dishonesty, intent to gain/cause loss |
| Abuse of position | Abusing a position of trust | Dishonesty, intent to gain/cause loss |
Key Point Checklist
This article has covered the following key knowledge points:
- Fraud under the Fraud Act 2006 can be committed by false representation, failing to disclose information, or abuse of position.
- Each fraud offence requires proof of both actus reus (the prohibited act or omission) and mens rea (dishonesty and intent to make a gain or cause a loss).
- The Ivey test is used to determine dishonesty: what did the defendant know or believe, and would ordinary decent people consider the conduct dishonest?
- Gain and loss are defined broadly and can be temporary or permanent.
- Main defences include absence of dishonesty, claim of right, and duress.
Key Terms and Concepts
- false representation
- representation
- dishonesty
- gain or loss
- legal duty to disclose
- abuse of position
