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A buyer discovers valuable ore on a seller's land, actively conceals the discovery from the seller, and induces him to sell at a low price. What is the position under the Indian Contract Act, 1872?

Question and options

A buyer discovers valuable ore on a seller's land, actively conceals the discovery from the seller, and induces him to sell at a low price. What is the position under the Indian Contract Act, 1872?

  1. Binding, as a buyer is under no duty to disclose what he discovers

  2. Voidable at the option of the seller, as the buyer's conduct amounts to fraud

  3. Voidable only if the seller proves the price was grossly inadequate

  4. Void, as both parties were mistaken about the value of the land

Answer and explanation

Correct answer: B - Voidable at the option of the seller, as the buyer's conduct amounts to fraud

Active concealment of a fact by one who knows it, with intent to induce the other to contract, is fraud under Section 17(2) of the Indian Contract Act, 1872, and Section 19 makes the contract voidable at the deceived party's option. Mere silence would not be fraud, but active concealment is. A mistake about value is not a mistake as to an essential fact under Section 20.

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