Business Law Q: WHAT IS THE DIFFERENCE BETWEEN FRAUD AND NEGLIGENCE? A: Fraud and negligence mainly differ in intent, whether the wrongdoing has been committed in bad faith or not. Fraud is defined as any form of deception deliberately practiced in order to secure unfair or unlawful gain. Many forms of such exist, including false accounting frauds (i.e., reporting false accounting data in the financial reports to report unrealistic profits, thereby strengthening credit rating, and other purposes) and ponzi schemes (i.e., ‘get rich quick’ investment scams which pay returns to investors from their own money, or from money paid in by subsequent investors). Negligence is any wrongdoing that has not been done in bad faith, i.e., without bad intentions. For example, a man who accidentally pushes off a hammer from the top floor and hitting a man below is guilty of negligence. In that case, criminal sanctions may not be imposed. However, gross negligence is different - it basically means serious carelessness, falling below the normal standard of care. A bus company involved in a deadly crash, later found to have not took their vehicles for maintenance for years, is guilty of gross negligence, and can face serious charges.
Posted on: Sat, 15 Mar 2014 09:29:31 +0000
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