Potential Prejudice

The crime of fraud is defined as the unlawful intentional making of a misrepresentation that causes actual or potential prejudice. So, in order for there to be fraud, all four elements have to be present.

Potential prejudice means that there was an intention to cause harm, but it did not succeed. A practical example is if X steals a credit card in the name of Y, walks into a shop, with the credit card, gets groceries, and at the till the sales person recognizes that the credit card can not belong to X, and the transaction is not made, potential prejudice is present. Y however was not potentially prejudiced. Although the card has Y’s name and signature on it, the credit card itself belongs to the Bank. The bank was potentially prejudiced, and the Bank will be the complainant in the court case.

Y is not the victim. Y did not suffer potential prejudice.

It can be determined then that if the sales person agreed to the sale, prejudice would have occurred.

For potential prejudice to be proved there has to be a risk that prejudice was possible. Only the possibility of prejudice has to be present, and that the misrepresentation is “good enough” to have deceived a sensible person. If the misrepresentation is unbelievable to a sensible person, there is no potential prejudice. Prejudice also does not have to be suffered by the party who the misrepresentation is made; it can be to a third party as well. As in my example supra, the prejudice would have been suffered by the Bank, not the grocery shop. Even though the sales person did not believe the misrepresentation, the potential prejudice was still a factor. If X had gone to a different store and they accepted the transaction, the Bank would have suffered a loss.