FRAUD

 

As a general rule, it may be stated that whenever a person causes another to act on a false representation which the maker himself does not believe to be true, he is said to have committed fraud.

Section 17 of the Contracts Act 1950 explains that fraud refers to acts committed by a party to a contract with the intent to deceive the other contracting party.

Section 17 lays down five different acts that may constitute fraud:

1. The suggestion, as to a fact, of that which is not true by one who does not believe it to be true;

S.17(a) has similar requirements as S.18(a) in that there must be a false representation of fact addressed to the party misled.

The only difference is the state of mind of the maker of the statement.Under17(a) maker of the statement does not believe it to be true.

Kheng Chwee Lian v Wong Tak Thong [1983] 2 MLJ 322

2. The active concealment of a fact by one having knowledge or belief of the facts;

Where a party to a contract actively conceals or prevents certain material information from reaching the other party to the contract,  this active concealment amounts to fraud.

Horsfall v Thomas

3. A promise made without any intention of performing it;

Where a promise is made without any intention of performing it, it is an act of fraud under S.17(c). Either the promisor knows that when he makes the promise he cannot perform it or he makes a promise that he intends to break.

MUI Plaza Sdn Bhd v Hong Leong Bank Bhd (No 2) [1998] 7 MLJ 122

4. Any other act fitted to deceive; and

S. 17(d) is a catch-all clause to prevent any fraud from escaping the net of the law.

Loi Hieng Chiong  v Kon Tek Shin

5. Any such act or omission as the law especially declares to be fraudulent.

Where  any law specially declares certain acts or omissions to be  fraudulent, such act  or omission  amounts to fraud under S.17 (e)