A broad array of traditional common law and equitable doctrines seek to prohibit and remedy commercial fraud. These conceptions of fraud are also utilised in Australia’s statutory regimes. Proving fraud gives rise to a larger suite of general law and statutory remedies and also carries greater social sanction and shame.
However, these concepts tend to demand high levels of proof of personal dishonesty or culpability on the part of defendants – a ‘fraudulent state of mind’. The problem is that corporations are artificial persons, so do not possess a ‘state of mind’. Rather, they act through human agents such as directors, managers and employees.
The rules about when it is possible to ‘attribute’ these individual agents’ intentions and knowledge to the artificial person, the corporation, are complex and restrictive. This make it difficult and sometimes impossible to prove fraud against large and complex corporations, greatly undermining the efficacy and deterrent power of the existing laws.
Given the primacy and power of corporations in modern commerce, our laws require re-purposing, or even radical overhaul.
This project is led by Professor Elise Bant at the UWA Law School and is funded by the Australian Research Council: Future Fellowship Project FT190100475.
unravellingcorporatefraud.com 