Fraud committed by business partners in commercial relations: legal analysis, case law and mechanisms of counteraction

This article presents a comprehensive interdisciplinary study of contractual fraud as a systemic threat to legal and economic security in the context of the digital transformation of business relations. The author introduces and substantiates the concept of a «counterparty threat» as a legal and economic category that reflects a new generation of risks in the entrepreneurial environment, stemming from the intentional bad faith of one party to a transaction. The study outlines key indicators of fraudulent conduct disguised as formally legal agreements, including the substitution of beneficiaries, fictitious contracts, artificial insolvency, and conflicts of interest. Special attention is given to challenges in law enforcement and judicial application, including inconsistencies in case law, ambiguity in the classification of such offenses between criminal and civil jurisdictions, and imperfections in evidentiary mechanisms. The paper analyzes typical tactical models of fraud – from contracts with deliberately inflated obligations to chain agreements involving cross-border liability evasion. A separate section is devoted to Ukrainian judicial practice, with a focus on decisions of the Supreme Court and first-instance courts, which reveal contradictions in assessing indicators of intentional deception, the fictitious nature of obligations, and undisclosed conflicts of interest. For the first time, the article systematically examines the conceptual vacuum in Ukrainian legislation regarding contractual fraud. References are made to both Ukrainian and foreign case law. The article also proposes a state business security strategy, emphasizing digital verification of counterparties’ credentials, corporate histories, and litigation backgrounds, as well as the mandatory implementation of due diligence procedures as a condition for minimizing contractual risks. Particular attention is paid to the practices of the EU, FATF, EPPO, and the United States (including SOX, the Dodd–Frank Act, and RICO). Combining in-depth theoretical and legal analysis with practical recommendations, the article is valuable for legislators, judicial authorities, business entities. It will be of interest to researchers in commercial and criminal law, policymakers in financial security, and practitioners involved in building corporate anti-crisis infrastructure.