In the last part we discussed misrepresentation in detail. Now let’s continue its discussion with fraud.
The term Fraud refers to intentional misrepresentation of facts. In English law “fraud” was defined in the well-known decision of the House of Lords in Derry v Peek (1889) LR 14 AC 337 at p. 374 Lord HERSCHELL said that
“Fraud is proved when it is shown that a false representation has been
made, —
(1) knowingly, or
(2) without belief in its truth, or
(3) recklessly careless whether it be true or false.” Further section 17 in the Indian Contract Act, 1872 says that ” ‘Fraud’ means and includes any of the following acts committed by a party to a contract, or with his connivance, or by his agent, with intent to deceive another party thereto or 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.” For example X sells to Y a horse which X knows to be unsound. X says nothing to Y about the horse’s unsoundness. This is not fraud in X.
Silence is case of fraud
A contracting party is neither under obligation to disclose whole truth to the other party nor he is bound to give whole information that is in his possession that affecting the subject-matter of
the contract. In Shri Krishnan v Kurukshetra University,(1976) 1 SCC 311 a candidate, who had full knowledge of the fact that he was short
of attendance . But he did not mention this fact in his examination form. The court held that it was not fraud and it was the duty of the University to scrutinise forms and to call for verification or information in case of doubts. The University having failed to do so, was estopped from cancelling the examination of the candidate. But how far may this silence go? Silence can become deceptive in following conditions
•) Duty to speak
The duty to speak arises where one of the contracting parties reposes trust and confidence in the other. When one of the parties is without any means of discovering the truth and has to depend on the good sense of the other party the duty to speak arises. For exampleAn insurance company knows nothing about the life or circumstances of the assured. It has to depend on the disclosures
made by the assured. It is, therefore, the duty of the assured to put the insurer in possession of all the material facts affecting the risk covered.
•)When silence is deceptive
“Silence speaks louder than words” we all have read this . Silence many times itself is equivalent to speech.A person who keeps silent,knowing that his silence is going to be deceptive ,is definitely guilty of fraud.
Aishwarya Says:
I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.
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