Differentiating Fraud by False Representation and Breach of Contract

According to the factual statements made by the abovementioned problem, in order to advice Mr. Tom herein, it would be necessary to look into the definition of fraud by false representation and breach of contract and the fine line between these two topics. It is stated that it is often confusing to pin point the blurry line between fraud and breach of a contract. Every fraud is a breach of contract but not every breach of contract is fraud. These elements need to be discussed first to categorise the issue of the abovementioned case study. Secondly, if there was a fraud by false representation, civil and criminal liability for that purpose should be ascertained.

Section 2 of the Fraud Act, 2006 defines fraud by false representation as an act committed by someone when he/she dishonestly makes a false representation to conclude a contract, while having the knowledge that representation might be untrue and/or misleading and the act has been committed with the sole motive of making wrongful gain for himself/herself and wrongful loss to the other party of the contract herein.

Thus, a fraud by false representation becomes operative when the one party at the beginning or end of a contract makes a false representation with the dishonest intention of causing wrongful loss to the other party in the aforementioned contract. The main element in the case of fraud by false representation is the dishonest motive. Whether the other party actually gained any monetary profit is not the point of consideration herein.

However, the test of dishonesty was set out to be a two-stage test as had been adjudicated under the case of R v. Gosh in the United Kingdom for a long time, where it was set out that if a defendant possesses a knowledge or belief of fact which shall be shown as untrue from the point of view of a layman, the defendant shall be held liable. In the year of 2017, a decision made by the Supreme Court of the State changed the narrative of the test of dishonesty under the case of Ivey v Genting Casinos, where it was held that the test of dishonesty shall be measured by the knowledge acquired by the defendant herein and whether the knowledge or belief of facts held by the defendant was of genuine nature or not.

Hence, if we consider all the legal issues herein and apply the same on the case study mentioned herein, it can be stated that Mr. Tom contracted The Good Builders Ltd. to build a replica of another Villa herein and the contract was set out in the manner that The Good Builders Ltd. were needed to take exact measurements of the Villa, shown as an example and build accordingly and the budget of the same was set at the tune of 16 Million Pound. However, after the Villa was made, Mr. Tom discovered that it is a smaller replica of the actual Villa and costs only 12 Million Pound. Also, due to the smaller measurements, the replica Villa does not hold any value in the

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eyes of the Renaissance Era Enthusiasts, which was one of the prime goals of Mr. Tom while building the Villa herein.

Thus, as has been set out in the earlier paragraph, The Good Builders Ltd. herein was no under any belief they counted as the fact and their act clearly shows that they intentionally took the wrong measurements in order to cause a wrongful gain to themselves and a wrongful loss to Mr. Tom. The Good Builder Ltd. herein had a dishonest motivation to make the false representation before Mr. Tom and thus, they would be held liable under the Fraud Act, 2006 and also shall be liable under the Civil law for mental harassment of Mr. Tom.

On the account of a fraud by false representation, the claimant herein can opt for rescind. As fraud by false representation makes a contract voidable at the liberty of the claimant, the claimant herein can revoke the contract and seek damages from The Good Builders Ltd. in the civil court and held them liable for damages for the mental harassment of the claimant as well. Again, as the case herein constitutes a fraud by false representation, the claimant herein can opt for criminal breach of contract as well where he can sue The Good Builders Ltd. for a fraud of 3 Million Pound and seek for similar redressal before the criminal court herein.