Question

Legal Principle: Mere silence as to the facts likely to affect the willingness of a person to enter into a contract is not a fraud, unless the circumstances of the case are such that, on close examination it is found to be the duty of the person keeping silence to speak or unless his silence is, in itself, equivalent to speech.
Factual Situation: X sells by auction to Y, a horse which X knows to be of unsound state of mind. X says nothing to Y about the horse's unsound state of mind. Give the correct answer.

• A. X can be held liable for fraud.
• B. X can be held liable for misrepresentation.
• C. X cannot be held liable, because he did not say anything positive about the mental state of the horse.
• D. X cannot be held liable because it is the buyer who must be aware of the things.

Answer 1

The correct option is C X cannot be held liable, because he did not say anything positive about the mental state of the horse.

X cannot be held liable, because he didn't say anything positive about the mental state of the horse.

Section 17 of Indian contract act tells about 'fraud'. Mere silence is not regarded as fraud, although there are some exceptions.

In the above mentioned case, X can't be held liable as he didn't lied but just didn't tell about the fact. If Y asked about the sound mind and X kept silent then it amounts to fraud.

Hence, C is the correct option.