Silence even as to come defects does not amount to an actionable misrepresentation. Discuss the validity of this statement

 Question NO 1: Silence even as to come defects does not amount to an actionable misrepresentation. Discuss the validity of this statement?

Answer:

1. Relevant Law:

Explanation to section 17 of Contract Act 1872

2. Cross Reference:

Section 17 to 19 of Contract Act 1872

3. General Rule

The first part of explanation to section 17 of Contract Act 1872 

provides the general rule that silence as to material facts affecting 

the mind of the other party is not a fraud.

In other worlds, a contracting party is under no obligation to 

disclose the whole truth to the other party or to give the whole 

information affecting the subject matter of the contract. 

Illustration

1. A sells who puts forth an unsound mind horse for sale but 

says nothing about its quality, commits no fraud.

2. Silence by a trader as to change in price is not an actionable

misrepresentation.

3. Silence by a candidate in exam as to shortage of his 

attendance is not a fraud.

4. Exceptions

Again, second part of explanation to section 17 of contract 

Act 1872 provides following exceptions where silence 

amounts to actionable misrepresentation.

i. Duty to speak

Duty to speak where one contracting party reposes trust and 

confidence in the other. In fact duty to speak arises where

contracting parties are in fiduciary relationship with each

other. Following may be instances of fiduciary relationship or

utmost faith.

 Contract between father & son

 Contract between master & servant

 Contract between husband and wife

 Contract of insurance

 Contract of surety ship

 Contract of marriage

 Contract of family settlement

Illustration

Silence by a father while selling an unsound mind horse to

his son amounts to fraud.

II. Silence is deceptive

Second exception where silence amounts to actionable

misrepresentation is deceptive silence.

Illustration

Buyers says to seller “If you don not deny it, I shall assume

that the horse is sound mind” silence says nothing despite

the fact that horse was unsound mind. Here silence is

equivalent to speak and amounts of actionable

representation.

III. Change of circumstances

At the very initial stage of a statement was true but late on

that statement becomes false but the said fact was

concealed when contract was actually made out.

Illustration

When offer and acceptance was being made, A told B that he

is earning Rs, 20,0000 per month but at the time of contract

actually made, a was jobless after silence on the part of A

amounts fraud.

IV. Half Truth

A person may keep silence but if he speaks a duty arises to

disclose the whole truth.

Illustration

At the time selling of immoveable property, A told B that 5

Marla of property is in possession. When property measure

2M was in possession of third person. Here silence or telling

half-truth amounts fraud.

5. Basis of principle that silence to know defect does not amount the

actionable misrepresentation

Doctrine of caveat emptor is the basis of general rule that

silence does not amount to fraud. According to said doctrine

a contacting party itself beware about its responsibility.

Exception to section 19 further makes it clear that where a

contracting party had means of discovery the truth with

ordinary diligence, that party cannot take the plea the

contract is voidable as silence was amounting to fraud or

misrepresentation.