UK Law and Practice Contributed by: Simon Bushell and Gareth Keillor, Seladore Legal
Seladore Legal 20-22 Bedford Row London WC1R 4EB UK Tel: +44 020 3882 2201 Fax: +44 020 4571 6728
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1. Fraud Claims 1.1 General Characteristics of Fraud Claims The law of England and Wales does not provide a specific, single cause of action of civil or com - mercial fraud, and has developed a flexible and creative approach to assisting victims of fraudu - lent behaviour. The typical claims utilised by a victim of fraud are: • fraudulent misrepresentation (under the tort of deceit); and • breach of trust or fiduciary duty (which are claims in equity). Fraudulent Misrepresentation (Deceit) Fraudulent misrepresentation (or deceit) is a cause of action available where Party A makes a false representation to Party B either by words or conduct, knowing it to be untrue (or being reck - less as to whether or not it is true) and intending Party B to rely on that representation. If Party B does so, and suffers a loss as a consequence, Party A will be liable to Party B in tort. Importantly, there is also a statutory action for misrepresentation under the Misrepresentation
Act 1967. A claim under the Act is often prefer - able to bringing an action in fraud because: • it reverses the burden of proof by requiring Party A to show they had an honest belief in the truth of the representation at the time it was made; • it does not require Party B to prove fraudulent conduct (which is a high hurdle in English law); and • it still allows for a measure of damages com - mensurate with a claim in fraud (ie, Party B is allowed to recover all losses flowing from the affected transaction, as opposed to, for example, a claim in negligent misstatement, where Party B is only allowed to recover losses that are the direct consequence of the misstatement). Breach of Trust/Breach of Fiduciary Duty “trustee” or “fiduciary” relationship often plays an important part in fraud claims. It exists where one person (the “fiduciary” ) has undertaken to act for or on behalf of another person (the “prin- cipal” ) in circumstances that give rise to a spe - cial relationship of trust and confidence. Com - mon examples may be the relationship between: • a trustee and beneficiary in an express trust;
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