Q. ‘B’ is A’s daughter and has just came of age. ‘A’ sells to ‘B’ a horse which ‘A’ knows to be unsound. ‘A’ says nothing to ‘B’ about the horse’s unsoundness. Does A’s silence amount to a fraud? If so, why? If not why not?
Civil Services (I.A.S.) Exam. 1953
Delhi Judicial Service Exam. 1990
Ans: Yes, A’s silence amounts to fraud—‘Explanation’ attached to Section 17 (Fraud).
Reasons: According to relevant part of ’Explanation’ attached to Section 17 mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud but if the circumstances are such as it becomes the duty of a person to speak rather than to keep mum, the silence amounts to fraud.
It is notable that generally duty of a person to speak and not to keep mum exists in case of contract of ‘uberimae fidei’ i.e., in case of contract of utmost confidence. A contract between father and son/daughter is a contract of ‘uberimae fidei’ and in such cases it becomes the duty of father to disclose all facts regarding contract to his son/daughter specially when he/she has just come of age.
From the above discussions it is clear that in the given problem it becomes the duty of father (‘A’) to tell his daughter (‘B’) about the unsoundness of horse before selling the horse, specially under the circumstances while ‘B’ has just come of age and if ‘A’ does not do so he commits fraud. Thus, in this problem A’s silence amount to fraud.
Note: Facts of this problem have been taken from Illustration (b) of Section 17.
Source: Kishor Prasad