17"Fraud" defined
"Fraud" means and includes any of the following acts committed by a party to a contract, or with his connivance, or by his agent1 , with intent to deceive another party thereto of his agent, or to induce him to enter into the contract:—
(1) the suggestion, as a fact, of that which is not true, by one who does not believe it to be true;
(2) the active concealment of a fact by one having knowledge or belief of the fact;
(3) a promise made without any intention of performing it;
(4) any other act fitted to deceive;
(5) any such act or omission as the law specially declares to be fraudulent.
Explanation.—Mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud, unless the circumstances of the case are such that, regard being had to them, it is the duty of the person keeping silence to speak2 , or unless his silence is, in itself, equivalent to speech.
Illustrations
(a) A sells, by auction, to B, a horse which A knows to be unsound. A says nothing to B about the horses unsoundness. This is not fraud in A.
(b) B is As daughter and has just come of age. Here, the relation between the parties would make it As duty to tell B if the horse is unsound.
(c) B says to A—"If you do not deny it, I shall assume that the horse is sound." A says nothing. Here, As silence is equivalent to speech.
(d) A and B, being traders, enter upon a contract. A has private information of a change in prices which would affect Bs willingness to proceed with the contract. A is not bound to inform B.
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1. Cf. s. 238, infra.
2. See s. 143, infra.
- 10 What agreements are contracts
- 11 Who are competent to contract
- 12 What is a sound mind for the purposes of contracting
- 13 "Consent" defined
- 14 "Free consent" defined
- 15 "Coercion" defined
- 16 "Undue influence" defined
- 17 "Fraud" defined
- 18 "Misrepresentation" defined
- 19 Voidability of agreements without free consent
- 19A Power to set aside contract induced by undue influence
- 20 Agreement void where both parties are under mistake as to matter of fact
- 21 Effect of mistakes as to law
- 22 Contract caused by mistake of one party as to matter of fact
- 23 What considerations and objects are lawful, and what not