Fraud

Fraud is the unlawful and intentional making of a misrepresentation which causes actual prejudice or which is potentially prejudicial to another.

There are four elements of the crime of fraud, namely:

1. A misrepresentation;
2. Prejudice or potential prejudice;
3. Unlawfulness and;
4. Intention.

The crime of fraud is originally known in Roman law as stellionatus and crimina falsi. Stellionatus was the criminal-law equivalent of the delict dolus, and developed from the actio de dolo in private law. It involved intentional misrepresentations resulting in harm or prejudice to others. Crimina falsi was the collective term for a number of crimes relating to falsification, almost all of which were derived from the rex Cornelia de Falsis. These different forms of falsification were, however, never unified into one generic crime. Examples of the crimina falsi are the falsification of will, of weights and measures, and of evidence. In the crimina falsi it was not required that somebody should necessarily have been prejudiced by X’s conduct. In stellionatus there seems to have been some form of prejudice in most of the examples mentioned in the sources, but it doubtful whether the prejudice necessarily had to be actual or of a proprietary nature: potential or non-proprietary prejudice seems to have been sufficient.

Roman-Dutch writers did not differentiate clearly between stellionatus and crimina falsi. At the beginning of this century the distinction between these two crimes became blurry; the courts combined stellionatus and crimina falsi and formed a new crime known as fraud. In fact, fraud has sometimes even been referred to as falsitas or “falsiteit”. The most important result of this merging has been that fraud may now be committed even where there is no actual proprietary prejudice: even non-proprietary or potential prejudice may be sufficient to result in a conviction.

Because the prejudice need not necessarily be proprietary in a character it follows that the interest protected by the crime is not exclusively property; it may sometimes be an interest of another nature, such as legal certainty.

1. Misrepresentation:

The form of misrepresentation can be in writing, the spoken word, or any gesture like the nodding of the head.

The conduct of the perpetrator will also imply the misrepresentation by his action.

When a person books into a hotel, he thereby implies that he will be/or is in a position to pay for accommodation. When he disappears without paying, his conduct by booking in, was a misrepresentation by implication.

The misrepresentation can be made by either the commission or omission.

Another form could be a promise about the future. When a person pays for goods with a post dated cheque, and there is good faith that he would have sufficient funds by then, it would not be a misrepresentation. But if a person was fired from his workplace and he is without income, then it would be a misrepresentation.

2. Prejudice or potential prejudice:

There must be real or potential prejudice. The mere telling of a lie would be the difference when as result of the lie could lead to the harm of another. The lie would be the misrepresentation, and the harm would be the prejudice. An example of prejudice would be when you buy goods with a stolen cheque, and get away with it.

Potential prejudice is when the harm was avoided by any type of intervention. When there was a possibility that you could have suffered any loss, but it did not manifest, that is when it is a potential loss or prejudice. An example of potential prejudice would be when you buy goods with a stolen cheque, and the store owner verifies the validity of the cheque, and you did not obtain any benefit.
The question is not if someone would suffer any loss, but rather if someone could suffer any loss.

3. Unlawfulness:

In the case of fraud, unlawfulness means making a misrepresentation with the intention of prejudicing another person. The state must prove this element beyond reasonable doubt. Here one should ascertain what the law prescribes. “Fraud is the unlawful and intentional…” To profit from someone by means of a misrepresentation is unlawful.

4. Intention:

The perpetrator must be aware of the fact that that the representation is false. The investigator must make sure that the intention was to defraud and not to deceive.
Negligence can not be equated with intention.

The intention will always be to profit from another by means of a misrepresentation.

5. Casualty:

Casualty is the relationship of cause and effect between two incidents: if one incident leads to another, there is a “casual relationship” between the two. In the case of fraud, the misrepresentation must cause actual or potential prejudice, in other words there must be a casual relationship between the misrepresentation and the prejudice.