FRAUD SEC.17 INDIAN CONTRACT ACT 1872
Definition of contract:
A contract is an agreement made between two or more parties which the law will enforce. Sec 2(h) defines contract as an agreement enforciable by law. Contract = An agreement + enforceable by law
* According to Sir William Anson: A legally binding agreement between two or more persons by which rights are acquired by one or more to acts or forbearances (abstaining from doing something) on the part of the others. * According to Salmond: A contract is an agreement creating and defining obligations between the parties. * An agreement is defines as “every promise and every set of promises, forming consideration for each other” [sec. 2(e)] Agreement = Offer + Acceptance
* Promise: When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a Promise. Promise = Proposal by one person + its acceptance by another person
ESSENTIAL ELEMENTS OF A VALID CONTRACT
1. Offer and acceptance
2. Intention to create legal relationship
3. Lawful consideration
4. Capacity of parties- competency
5. Free and genuine consent
6. Lawful object
7. Agreement not declared void
8. Certainty and possibility of performance
9. Legal formalities
According to section 13. Two persons are said to have consented when they agree upon same thing in the same sense. In English law, this is called ‘consensus – ad – idem’
Effect of absence of consent:
1 When there is no consent at all, the agreement is void – ab – initio’. It is not enforceable at the option of either party
X have two car one Maruti car and one Honda city car. Y does not know that X has two cars Y offers to buy car at Rs.50,000. Here, there is no identity of mind in respect of the subject matter. Hence there is no consent at all and the agreement is void – ab – inito. Example 2:-
An Illiterate woman signed a gift deed thinking that it was a power of attorney – no consent at all and the agreement was void – ab – inito [ Bala Devi V S. Manumdats ] Free consent
⇒ Consent is said to be free when it is not caused by [ Section 14] (a) coercion [Section 15]
(b) Undue influence [Section 16]
(c) Fraud [Section 17]
(d) Misrepresentation [ Section 18]
(e) Mistake [Section 20, 21,22]
Effect of absence of Free Consent :- If consent coercion, undue influence, fraud , Misrepresentation the contract is voidable at the option of party whose consent was not free [19, 19A]
The term fraud means a take representation of facts made willfully with a view to deceive the other party. ⇒ Sec.17- fraud means any act committed by a party to a contract or with his connivance or by his agent with intent to deceive another party there to or his agent or to induce to enter into contract.
Essentials of fraud :-
(a) By a party to the contract
(b) There must be representation – [an opinion a statement of expression – does not fraud].
(c) The representation must be false.
(d) Before conclusion of contract.
(e) The misrepresentation must be made willfully.
(f) The misrepresentation must be made with a view to deceive the other party.
(g) The other party must have actually been deceived.
(h) The other party have suffered a loss.
Fraud – definition include
1 The suggestion, as to fact, of that which is not true by one who does not believe it to be true. 2 The active concealment of a fact by one having knowledge or belief of the fact.
Ex. A furniture dealer conceals the crakes in furniture by polish work. 1 A promise made without any intention of performing it. 2 Any other act fitted to deceive.
4 Any such act or omission as the law specially declared to be fraudulent. 5
6 Ex:- T bought a cannon from H. It was defective, but H had plugged it. T did not examine...