Question

Solve.
X sells by auction to Y a horse which X knows to be unsound. The horse appears to be sound but X knows about the unsoundness of the horse. Is this contract valid in each of the following alternative cases:
Case:
(a) X says nothing about the unsoundness of the horse to Y.
(b) If X says nothing about it to V who is Xs daughter who has just come of age.
(c) if V says to X if you do not deny it, I shall assume that the horse is
sound. X says nothing.

Answer 1

Solution:
Section to which the given problem relates: Section 17.
Case (a)
Decision:
This contract is valid.
Reason:
Mere silence as to the facts likely to affect the willingness of a person to enter into a contract is not a fraud. Here, it is not the duty of the seller to disclose defects.
Case(b)
Decision:
This contract is not valid.
Reason:
It becomes Xs duty to tell V about the unsoundness of the horse because a fiduciary relationship exists between X and his daughter V. Here, X's silence is equivalent speech and hence amounts to fraud.
Case (C)
Decision:
This contract is not valid.
Reason:
Here X's silence is equivalent to speech and hence amounts to fraud.