Fraud by Failing to Disclose

Section 3 of the Fraud Act 2006 provides that a person is in breach of the section if they 'dishonestly fail to disclose to another person information which he is under a legal duty to disclose' and intend, by the failure to disclose, either to make a gain for themselves or another, or to cause loss to another or to expose another to a risk of loss. Unlike fraud by false representation under section 2, this offence requires an existing legal duty of disclosure — the duty may arise under statute, from the express or implied terms of a contract, from the custom of a particular trade or market, or from the existence of a fiduciary relationship between the parties.

Because liability depends on an omission rather than a positive representation, the offence is closely tied to whatever legal duty of disclosure is said to exist in the circumstances — the Act itself does not create new duties to disclose, it only criminalises a dishonest failure to comply with a duty that already exists elsewhere in the civil or regulatory law, provided the dishonesty and intent to gain or cause loss are also present.