Fraud by False Representation

[komondor]

Can one be convicted of 'Fraud by False Representation' if someone providing one with finance signs a contract on the basis solely of demonstrably existing assets but later claims that additional documents submited after the signing of the contract (and not required by the contract) were 'false'?

[jaguarsuk]

You are going to have to expand on this and tell the story of what has happened.

[komondor]

Hi JaguarsUK,

Thanks for your reply. Essentially, an asset finance company provided funds for business equipment, the funds were based on a contract which relied on the equity in a property being sufficient to ensure the loan should anything 'go wrong'. That sufficient equity existed is not disputed, the loan was paid for 2 years reliably and then the asset fiancne company pulled the deal on the basis of one missed payment. They then claimed that 'false' docuemnst were provided (if they were they can only have been provided after the contract was signed and they were not required as part of contract signing. So they are now claiming that they only entered into the deal on the basis of the latter documents not on the basis of teh equity (despite the contract having demonstrably been signed at a date prior to there being any possibility of there having been any reliance on the assume d'false documents'.

[jaguarsuk]

Okay, the devil is going to be in the detail of the contract and if it says these documents are required for the loan it doesn't matter when they were provided they form a key part of the contract. If they form part of the contract and are false then that would be fraud.

If the documents are not a condition of the contract why would they have been provided to them?

[Amethyst]

Was the finance actually used for its intended purpose? ( to buy equipment for the business)

[komondor]

Hi Amethyst & JaguarsUK and thank you for your replies. In answer to your queries, 'yes' the money was used to buy the equipment and 'no' the assumed 'fraudulent' documents were not a condition of the contract (the contract contained no reference to anything other than the equity in property and was 'signed and sealed' before any of the documents were sent.). The documents were sent (post hoc) I think because the asset finance broker (not the asset finance company) realised that they had failed to carry out 'due diligence' and were belatedly covering their backs, Staff dealing with company iossues whilst the director was in hospital mistakenly responded to what seemed like a normal business request and provided the documents, which, two years later after most of the money had been paid back were defined as 'fraudulent' so that the asset finance company could, after pulling the deal following one delayed payment, .could seek compensation.

I guess my basic query is: If the documents were not asked for as a specific clause in the contract (directly or indirectly) and the documents were passed over after the contract was already signed by both parties on the basis of proeprty equity, can there be any question of 'fraud' having occurred simply because staff in error and subsequent to the contract being signed passed over to the brokers (not teh finance company itself) documents which could be interpreted as 'innacurate'? If anyone has references to any relevant case law, I would be extremely grateful.

Thanks again for your help.

[Amethyst]

Well, they can't say they entered into the agreement on the basis of the documents which were provided after the contract was entered into, no. If the documents showed that representations made prior to entering into the contract and they relied on those representations in making the decision to lend, then possibly they'd have an argument. But if no representations were made before entering into the agreement that were directly related to the documents then no.

They are calling in the full balance due to a single missed payment ( which was later paid). Likely they are able to do so under their terms.

The documents were sent (post hoc) I think because the asset finance broker (not the asset finance company) realised that they had failed to carry out 'due diligence' and were belatedly covering their backs,

This concerns me a little. Were representations made to the broker ( and by the broker to the finance co) which were later disproved by the provision of the documents? ( possibly the broker would be liable )

You want to get copies of the documents that the broker put forward to the finance co when making the application for the finance.

Can you post a redacted copy of the finance agreement and terms?

[komondor]

Hi Amethyst,

Thanks again for responding. No, there weren't any representations made to the broker which were later disproven. I don't have a copy of the lease with me, so can't redact and scan, but may be able to do later in the week. I think I probably need some case law on this. The fact that the lease was already signed before any of the assumed 'fraudulent' documents were given to the finance broker is easy to prove because of the dates, the issue is purely whether documents sent after the finance company had agreed the lease can be used to suggest that they were 'defrauded' into the deal or not. Logically, i don't see how this can be the case, but I need a case in which this has been made explicit...