MERE SILENCE IS NO FRAUD

In today's world, free consent is a requirement for any form of contract. Without free consent,
the contract is voidable at the affected party's discretion. The free consent is tainted by fraud. A
contract obtained by deception is voidable. What constitutes fraud and whether mere silence
constitutes fraud will be clarified in the following paragraphs.

INTRODUCTION:

Section 10 of the Indian Contract Act, 1872, defines the essentials of a contract. The following
are the essentials: a. Unrestricted consent; b. Contracting competence; c. Legal consideration; d.
Legal object; e. Consensus ad idem; f. Not ruled invalid by any statute.

The basic and sine qua non ingredient of a lawful contract is free consent. The ends of justice
cannot be achieved without free consent and ad idem consensus. This is something that needs
to be thought about. Sections 13 and 14 specify what constitutes consent and what constitutes
free consent. “Two or more persons are said to consent when they agree on the same thing in
the same sense,” according to Section 13. When two or more people agree to the same issue in
the same way, they are said to consent." [two] As stated or defined above, consent is when both
parties agree on the same thing in the same way. Consensus ad idem is another name for it. It
means that you agree on the same thing in the same way. It is a requirement for unrestricted
consent. Since, for example, A intends to sell a white horse and has offered B the same, the
explanation must be deduced. B agreed that it was a black horse. The question now is whether
the contract contains a consent clause. The response is NO as they have not committed to the
same thing in the same way. Consent alone would not suffice in a contract. Consent must be
freely given. Section 14 of the Indian Contract Act of 1872 defines free consent. It goes like this:
"Free consent" is described. When consent is not influenced by— — it is said to be free. "(1)
coercion, as specified in section 15, or (2) undue influence, as defined in section 16, or (3) undue
influence, as defined in section 16, or (4) undue influence, as defined in section 16, or (5) undue
influence, as defined in section 16, or (6) undue influence, as defined in section 16, or (7) undue
influence, as

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As stated in the definition, free consent is defined as consent given without coercion, undue
interference, fraud, misrepresentation, or error. As a result, free consent is a requirement for a
legal contract.

FRAUD: A contract is void if the consent is obtained through fraud, according to Section 14[4] of
the Indian Contract Act, 1872.

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(3) any promise made with the intent to deceive; (4) any other act designed to deceive; (5) any
act or omission that the law expressly considers to be fraudulent.” [5] If one of the above
conditions is met then it amounts to fraud and the contract is voidable at the option of the
affected party In a nutshell, fraud is when one party makes a willful misrepresentation in order
to mislead or persuade the other party to enter into a contract. The contract is voidable.

English law:

In the case of Derry v. Peek[6], Fraud was described under English law. According to the facts, a
company's prospectus stated that it was approved by an Act of Parliament to operate trams
using stream or mechanical power. However, the permission of the Board of Trade is de facto a
requirement for using the steam. The prospectus made no mention of this. The company was
liquidated, and one of the stockholders filed a lawsuit. It is not fraud because the directors
sincerely believed that permission was not necessary. Fraud was defined as: “Fraud is proved
when it is shown that a false representation has been made.

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As we have already grasped the concept of fraud, it is only natural to grasp the concept of
concealment and its position in fraud. There are two forms of concealment:

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Active concealment occurs when someone has the responsibility to communicate but does not.
Active concealment is considered fraud, and the contract is voided. Passive concealment is
described as a simple silence about the kernel facts or material facts that may affect the parties'
consent. The principle of consent is not vitiated by mere silence about material evidence.

MERE SILENCE IS NO FRAUD:

As stated earlier, passive concealment does not amount to fraud. Silence alone, when one is not
obligated to talk, does not constitute fraud. The same is stated in the INDIAN CONTRACT ACT,
1872, section 17 description.

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A party is not required to reveal all relevant information unless there is a duty to speak, when
silence constitutes deception, when half-truths are spoken, or when circumstances alter. If ‘A'
offers to sell a horse to ‘B' despite knowing that the horse is mentally unstable and B does not
inquire, A cannot be held accountable because there was no obligation to talk.

b. Illustrations to Section 17:

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“A and B, as traders, enter into a contract,” says the second example. A has access to confidential
information about a price adjustment that could impact B's ability to complete the contract. “A
is not obligated to tell B.” Even in this case, the lawmakers wanted to convey that mere silence is
not deception because there is an obligation to talk or silence that is similar to or equal to
expression. In the previous two diagrams, B did not ask A any questions about the consistency
or something like that. As a result, the position that mere silence is not deception is clarified. c.

The Kurukshetra University v. Shri Krishnan [nine] The following are the facts of the case: The
applicant had applied for the exam in this situation. He purposefully left out the fact that he had
a lack of attendance on the test form Later, it was discovered that he had a low attendance rate.
Action was taken, which was later contested in court. Now the Supreme Court had to decide if it
amounted to fraud. There were heated debates. The Supreme Court ruled that it did not amount
to fraud. It was as a result of the following: Fraud cannot be claimed as a defence in cases where
fraud can be detected by due diligence. Since it was their responsibility to investigate the
shortage thoroughly and they failed, The student cannot be held responsible for this. There was
no obligation to talk because it was their responsibility to determine that.

EXCEPTIONS TO “MERE SILENCE IS NO FRAUD"

It is necessary to repeat the above-mentioned clarification of Section 17 of the Indian Contract

Act of 1872. “Mere silence as to facts likely to influence a person's willingness to enter into a
contract is not fraud, unless the circumstances of the case are such that, having regard for them,
the person keeping silence has a duty to talk, If his silence is equal to expression in and of itself.”
[11] Unless the circumstances of the case dictate otherwise, as specified in the description,
Regarding them, it is the responsibility of the individual who is silent to speak, unless his silence
is equal to expression. As a result, the following are the exceptions:

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While the assertion might not have been a misrepresentation before, it may become one as a
result of a change in circumstances. If the individual who is making the change becomes aware
of the changes, it is his duty to inform the other party. If not, it may be considered fraud. In T.S.
Rajagopala Iyer v. South Indian Rubber Works Limited[13], the prospectus initially mentioned
just a few people as directors, but this was later revised. It was decided that it was their
responsibility to inform them of the changes.

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CONCLUSION: In general, silence is not a form of deception. One cannot be held responsible for
fraud simply because they are unaware of the relevant truth. However, there are several
exceptions. There are times when: a. It is one's duty to speak; b. Silence is equivalent to speech;
c. Conditions change; d. Details are only half-mentioned.