Fraud: By Failure to Disclose Flashcards
(10 cards)
The actus reus of s 3 FA 2006 requires D to fail to disclose information when under a legal duty. Which of these can give rise to that duty?
A. A statutory obligation to notify benefit changes
B. A public moral expectation
C. A general duty not to lie
D. A private hope of honesty
A. A statutory obligation to notify benefit changes
Explanation: Section 3 duty may arise from statute, such as welfare rules requiring notification of changed circumstances (e.g. R v Mashta)
Apart from statute, which is another recognized source of the s 3 duty to disclose?
A. Common-law duty of good faith in all contracts
B. Express or implied contractual term requiring disclosure
C. A general expectation of courtesy
D. A voluntary undertaking in social settings
B. Express or implied contractual term requiring disclosure
Explanation: Section 3 duty can arise from contractual obligations—express or implied—such as R v Razoq’s locum‐agency contract
As trustee of his late aunt’s estate, Lee sells a painting at market value but conceals the sale proceeds from beneficiaries. Under s 3, his omission is:
A. Fraud by false representation
B. Simple breach of trust only
C. Fraud by failure to disclose his fiduciary duty
D. Not an offence without misrepresentation
C. Fraud by failure to disclose his fiduciary duty
Explanation: A fiduciary duty to disclose material transactions triggers s 3; withholding the proceeds is a s 3 AR omission
Priya buys home insurance and knowingly omits declaring previous leaks. Which duty covers her omission under s 3?
A. A duty under s 4 FA 2006
B. Duty of public policy
C. Insurance “utmost good faith” duty
D. No duty; silence is allowed
C. Insurance “utmost good faith” duty
Explanation: Insurance contracts impose a legal duty of disclosure (uberrimae fidei); failure engages s 3 AR
For s 3 FA 2006, D’s omission is dishonest if:
A. He objectively ought to have disclosed
B. He was careless in considering his duty
C. He thought disclosure irrelevant
D. Ordinary decent people would view his concealment as dishonest (Ivey test)
D. Ordinary decent people would view his concealment as dishonest (Ivey test)
Explanation: Apply Ivey v Genting: (i) D’s honest belief as to facts; (ii) would ordinary people call it dishonest?
Under s 3(1)(b), D must intend by non-disclosure to:
A. Actually make a tangible profit only
B. Avoid moral blame
C. Make a gain or cause a loss, even if it doesn’t materialize
D. Entertain personal satisfaction
C. Make a gain or cause a loss, even if it doesn’t materialize
Explanation: “Gain”/“loss” under FA 2006 s 5 cover intended benefit or prejudice, temporary or permanent, even if unrealized
Which of these distinguishes s 3 FA 2006 from s 2 (false rep.)?
A. Requires an actual false statement
B. Requires only an omission when under duty, no false representation
C. Applies only to corporate fraud
D. Needs proof of reliance by another
B. Requires only an omission when under duty, no false representation
Explanation: Section 3 is complete on omission of required disclosure—no active misrepresentation is needed
What is the maximum sentence on indictment for fraud by failure to disclose?
A. 5 years’ imprisonment
B. 10 years’ imprisonment
C. Unlimited fine only
D. Life imprisonment
B. 10 years’ imprisonment
Explanation: FA 2006 s 3 follows s 1 maximum penalty: up to 10 years’ custody or an unlimited fine on indictment
A car dealer, operating in a market where it is standard practice to disclose outstanding finance on a vehicle, sells a car without mentioning the lien. Which offence is committed?
A. Fraud by false representation under s 2
B. Fraud by abuse of position under s 4
C. Simple breach of contract only
D. Fraud by failure to disclose under s 3
D. Fraud by failure to disclose under s 3
Explanation: Because a well-established trade custom requires disclosure of finance arrangements, the dealer’s omission contravenes a legal duty to disclose material facts, fulfilling the AR of fraud by failure to disclose
Under s 3 FA 2006, a trade‐custom duty to disclose may arise where:
A. Industry participants universally expect full disclosure of material facts
B. One party has a unilateral moral expectation
C. A voluntary code of conduct exists without binding force
D. A casual social practice governs information sharing
A. Industry participants universally expect full disclosure of material facts
Explanation: A trade‐custom duty arises where, in a particular trade or market, it is universally accepted that certain information must be disclosed. This custom, if sufficiently notorious and uniform, creates a legal duty under s 3 FA 2006
