Commercial Fraud: An Introduction
Callum Halley
17/06/2019

Commercial fraud is a complex but increasingly common issue which often has extremely damaging consequences for the reputation and financial standing of businesses and individuals alike. Once discovered, it is vital to act swiftly in order to protect assets and maximise recovery.  Where you are facing allegations, it is equally important that urgent steps are taken to robustly defend those claims.  

What is Commercial Fraud? 

Commercial fraud is an umbrella term for a wide range of deliberate actions often of a criminal or dishonest nature. Fraud in itself is not recognised as a single cause of action in English law.  Instead, a claim is likely to encompass a number of aspects, such as:

  • Bribery;
  • Breach of contract;
  • Breach of trust;
  • Fraudulent trading or other transactions; and
  • Conspiracy.

That being said, this area of law is constantly developing with the courts eager to retain flexibility in how these claims are handled.  Early and effective legal advice will help ensure the most appropriate causes of action are identified.  

Practical Considerations

A commercial fraud claim should not be made lightly.  The courts require significant detail in the pleadings and there is often a reluctance to find that a party has acted fraudulently.  Strong evidence, usually in the form of contemporary documentary and witness evidence, is vital in the prosecution and defence of such claims.

It is also important to consider the impact upon any insurance policies.  Many insurers will not provide cover in respect of dishonest and criminal acts, or may void cover upon receipt of details of such acts.  This may well affect a potential claimant’s ability to recover its losses, but also the personal liability of an individual involved in the fraud.

Businesses should develop procedures to ensure they conduct regular due diligence.  This can help to prevent and detect fraud at an early opportunity, whilst also forming important evidence in any defence of a  commercial fraud claim.

As with any piece of litigation, the parties will be encouraged by the courts to engage in settlement discussions.  These can be a highly effective and cost-efficient method of resolving a dispute. This is particularly so in cases of commercial fraud where confidential information and reputations are often at stake.  

Commercial Fraud Outcomes

A claim arising from commercial fraud will usually seek the recovery of all assets or proceeds diverted by the fraud, along with an order preventing further fraudulent activity.  In certain circumstances, damages may also be awarded, though this is very much dependent upon the facts involved. 

Are you concerned that commercial fraud has occurred in your business dealings? Or is a claim of commercial fraud being brought against you? For more information on how the Pannone Corporate team can help, simply get in touch on 0800 131 3355 today. 

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