Question

Principle: When a person represents to another something as a true fact knowing well truly that it is not true, " he is guilty of fraud. The person subjected to fraud may avoid an agreement.
Factual Situation: A presents a horse for sale. The' horse is kept on display, so that anyone interested could examine it. The horse has a cracked hoof and it is cleverly concealed by the owner. B tells "if you do not deny it, I Shall assume that the horse is sound." A keeps silent. B purchases the horse.

• A. B can avoid the agreement on discovery of the defect
• B. B cannot avoid the agreement, as the horse was a display and he could have satisfied himself of its soundlessness by personal examination
• C. B cannot avoid the agreement as A did not make any representation to mislead him. He merely kept silent so that B could find things by himself
• D. None of the above

Answer 1

The correct option is A B can avoid the agreement on discovery of the defect

(a) Option (a) is correct as the ruling principle clearly states that if the seller KNOWINGLY OR INTENTIONALLY hides truth or misrepresents untrue facts as true, he is guilty of fraud. In present situation despite of B's announcement that without A's denial he will consider horse as sound, A did not disclose truth to B. Hence B can void the contract as fraudulent intention of A is clearly established.
(b) is incorrect. Although one can't deny the fact that the horse was on display and could be examined by B for its soundlessness but on declaration by B that he would consider horse to be sound If A didn't deny it, the onus of telling the defect in the horse is on A and thus concealment of defect by A will be considered intentional and fraudulent in nature.
(c) is also incorrect. Intentional silence will also amount to lying or concealment of truth.