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A sells a horse at auction to B, knowing it to be unsound. B does not ask about its soundness and A says nothing about it. What is A's silence under section 17 of the Indian Contract Act, 1872?

Question and options

A sells a horse at auction to B, knowing it to be unsound. B does not ask about its soundness and A says nothing about it. What is A's silence under section 17 of the Indian Contract Act, 1872?

  1. Not fraud, since mere silence is not fraud and A was under no duty to speak

  2. Fraud, since A concealed a defect known only to him

  3. Fraud, but only if B later suffers loss

  4. Misrepresentation under section 18

Answer and explanation

Correct answer: A - Not fraud, since mere silence is not fraud and A was under no duty to speak

The Explanation to section 17 of the Indian Contract Act, 1872 provides that mere silence as to facts likely to affect a person's willingness to contract is not fraud, unless the circumstances impose a duty to speak or the silence is, in itself, equivalent to speech. Illustration (b) to the section applies this to the sale of a horse known to be unsound. Fraud under section 17 needs a positive act or statement, or active concealment; and misrepresentation under section 18 likewise requires an assertion or a breach of a duty.

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