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Intentional or willful misrepresentation of a material fact essential to the contract is called as “fraud”. A wrong representation of facts would amount to fraud if there is an intention to deceive the other party. According to Sec. 17 of the Contract Act, “fraud” means and includes the following acts:
  • The suggestion as to a fact, which is not true, by one who does not believe it to be true-
    A false statement amounts to fraud if the wrong representation is made by a person purposefully with the intention of deceiving the other party into the contract.
    If such wrong representation is made unintentionally by the party then it would not amount to fraud it would rather be termed as misrepresentation.

    Example: A sold a car to B representing it to be new and in working condition. Later on B found that the car is an old one with defects that renders it unuseful for the very purpose for which it is purchased. Such statement by A would amount to fraud as it was done with an intention to deceive an induce B into the contract.

  • The active concealment of a fact by one having knowledge or belief of the fact: Active concealment refers to a purposeful supersession of facts by a person in order to deceive the other party and gain his consent.

    Example: A sold to B a statue made out of pieces of stones joined together. A knows this fact. He had very carefully connected the joints with architectural technique to give an impression that it is made out of a single stone. A is guilty of active concealment (fraud).


    Note: Active concealment is when the party takes positive steps to prevent the information from reaching the other party


    Example: A furniture dealer covers the cracks in the furniture and paints it in such a way that the cracks cannot be discovered easily, his act amounts to fraud.

  • A promise made without any intention of performing it: A proposal when accepted becomes a promise. Analysis of definitions of offer, acceptance and promise states that a party making a promise does so with an intention of performing it. Therefore when a party makes a promise purposefully with the intention of not performing his part of the promise then he is said to have procured the consent of the other party by means of fraud.

    Example: Mr. A without having any intent (i.e., intention) to regard the marriage as a real marriage, goes through the marriage ceremony, such an act amounts to fraud as the party willfully induced the other to enter into a contract without the intention of fulfilling the terms himself.

  • Any other act built to deceive: If an act of the party cannot be attributed to the above given parameters then it would still amount to fraud if such an act leads to deceiving the other party to his detriment. To sum it up it can be stated that any act which leads to deceiving the other party into the contract amounts to fraud.


    Example: A husband was under heavy debt and in order to pay them, secured from his wife a no objection certificate (NOC) regarding his wife’s property. His wife had four pieces of land. Husband represented that he requires NOC for one such piece of land but fraudulently procured for all the four pieces of land later the wife came to know about the same and wanted to cancel the NOC. She was allowed to do so.

  • Any such act or omission specially declared by the law to be fraudulent: There are certain acts and omissions that law specifically considers as fraudulent on the ground that such acts or omissions cannot happen in normal course of dealings and if they do then it would amount to fraud. Thus non compliance to certain mandatory rules would amount to fraud. For example Section 55 of the transfer of property Act, omission on the part of the seller to disclose to the buyer all material defects in the immovable property amounts to fraud.

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