Question

Given below is a statement of legal principle followed by a factual situation. Apply the principle to the facts and select the most appropriate answer.

Principle: Mere silence as to the facts likely to affect the willingness of a person to enter into a contract is not fraud unless the circumstances of the case are such that, on close examination, it is found to be the duty of the person keeping silent to speak, or unless his silence is, in itself, equivalent to speech.

Facts: X sells by auction to Y, a horse that 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-

Options

• X can be held liable for fraud.

• X can be held liable for misrepresentation

• 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 it is the buyer who must be aware of the things.

Answer 1

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

Explanation:

Here silence as to facts likely to affect to the willingness of a person to enter into, the contract is not fraud unless the circumstances of the case are such that, regard being had to them it is the duty of the person keeping silence is itself equivalent to speech. In the present case, A says nothing to B about horse's unsoundness this is not fraud in A.