ACCA Applied Skills · Corporate and Business Law (Global) · Fraudulent and criminal behaviour
Bright Ltd's finance director deliberately sends a false set of figures to a bank to obtain a loan, knowing the figures are untrue. Which description best fits the director's conduct?
The conduct is fraud. The director knowingly gave false figures to the bank dishonestly in order to obtain a loan. Deliberate falsity and the intention to gain distinguish fraud from negligence or an honest error.
- AFraud, because there is a dishonest false representation made to gain financiallyCorrect
- BNegligence, because the director failed to take reasonable care with the figures
- CBreach of contract only, because the loan agreement has been formed
- DA mere error of judgment, because the bank can check the figures itself
Explanation
Fraud involves dishonestly making a false representation, knowing it is false, to gain or cause loss to another. Negligence involves a lack of care, not deliberate dishonesty, so it does not fit knowing falsity.
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