FRAUD

False representations being made

Knowingly
Without

belief in its truth. Not caring it to be true or

false.
There is a concealment of a material fact/ is a partial
statement of fact.
Intention to deceive
Fraud

means and includes any of the following acts done

with an intent to deceive or to induce a person to enter
into a contract:

Any false suggestion or statement

Active concealment of fact by one having knowledge or belief of
the fact
A promise made without any intention of performing it.
Any such act or omission as the law specially declares to be
fraudulent.

(e.g playing with financial records)

A sells by auction, to B , a horse which A

knows to be unsound. A says nothing to B
about horses unsoundness. Is it a fraud?

B says to A , If you do not deny it, I shall

assume that the horse is sound. A says
nothing. Is it a fraud now ?

ESSENTIAL ELEMENTS OF FRAUD

There must be a representation and it must

be false.
The

prospectus of a company did not refer to the

existence of a document disclosing liabilities.
This gave an impression that the company was
prosperous. Held non disclosure amounted to
fraud.

The representation must relate to a material

fact.
A mere opinion is not regarded as
representation of fact.
A sells some spoons to B and says that they are as
good as that of X. Is this a misrepresentation?

Must have been made before the conclusion

of the contract , with a motive to induce the
other party.

Other party must have been induced to act

upon the representation asserted.

Other party must have relied upon the

representation and must have been
deceived.

Other party must have suffered some loss.

CONSEQUENCES OF FRAUD

He can rescind the contract

He can sue for damages
He can insist on the performance of the
contract.

SILENCE AS TO FRAUD

Before letting his house, a landlord failed to

tell the tenant that it was in a ruinous
condition. held he was not liable in deceit as
the tenant should have inspected the house.

H sold to W certain pigs.

The pigs were suffering from some fever and
H knew it. The pigs were sold with all
faults. H did not disclose the fever to W.
Held : There was no fraud.

MISTAKE

Any erroneous belief about something.

Mistake of law
Mistake

Ignorance of law is not an excuse

A and B enter into a contract on the erroneous
belief that a particular debt is barred by the Indian
law of limitation.

Mistake

of law of the country

of law of a foreign country

Mistake of fact
Bilateral
unilateral

BILATERAL MISTAKE

Mistake must be mutual

A

agreed to purchase Bs motor which was lying

in Bs garage. unknowingly either party,the car
and garage were completely destroyed by fire a
day earlier.

Mistake must relate to matter of fact

essential to the agreement.
A

,man and a woman entered into a separation

agreement under which the man agreed to pay a
weekly allowance to the woman, mistakenly
believing themselves lawfully married. Held the
agreement was void.

UNILATERAL MISTAKE

Where only 1 party is mistaken regarding the

subject matter or in expressing or
understanding the terms or the legal effect
of the agreement.
A offers to sell his house to B for an intended
sum of Rs.44000. By mistake he makes an
offer in writing of Rs.40000. He cannot plead
the mistake as defence.
A buys an article thinking that it is worth Rs.
1000 when it is worth only Rs. 50. A cannot
subsequently avoid the contract.