Question

Apply the given legal principles to the facts provided in the following of the question and select the most appropriate answer.
Principle : Fraud includes the suggestion, as a fact, of that which is not true, by one who does not believe it to be true or the active concealment of a fact by one having knowledge or belief of the fact, with intent to deceive another party or her agent to enter into the contract.
Facts : Wind-on Ltd. is a leading manufacturer of wind turbines to harness wind energy to produce electricity. It is based out of Nagaland in India and has been manufacturing wind turbines since the early 1990s with national and international fame. Z Infrastructures Ltd. is a leading infrastructure firm with a proven track record in building energy installations and highways across India. Z Infrastructures wanted to expand its portfolio and operate a wind energy park to supply clean electricity. Representatives from Wind-on and Z Infrastructures carried out extensive negotiations, advised by leading law firms and commercial advisory firms on both sides, for the latter to establish a wind park in Odisha. Z Infrastructure wanted Wind-on to guarantee that the turbines will generate 54 lakhs Kwh of energy per turbine annually. Wind-on’s stated position was that generation of energy is dependent on availability of wind and they could not guarantee it. However, they provided an “estimate” in the contract for supply of turbines that the turbines will be able to generate around 50 lakhs Kwh per turbine annually. The turbines were supplied by Wind-on and operated by Z Infrastructure in Odisha for over 2 years. During this period, Z Infrastructure found that the average energy generation of each turbine came to around 35 lakhs Kwh annually. They were frustrated as the actual generation of each turbine was significantly lower than the generation estimate provided by Wind-on. They reached out to Lal & Co., a leading dispute resolution law firm to understand if they could initiate action against Wind-on for fraudulently representing the generation estimate of each turbine.
You are a lawyer at Lal & Co., and were asked if Wind-on had committed fraud by providing an inflated energy generation estimate

• A. Yes, as Wind-on was an expert in the wind turbine business and Z infrastructure relied on its expertise as a new entrant in the field
• B. No, as Wind-on clearly specified that the energy generation figure was merely an estimate and it could not provide a guarantee
• C. Yes, as Wind-on should have predicted a figure that was closer to the actual generation figure of 35 lakhs Kwh per turbine per annum
• D. Yes, as Wind-on should not have provided any estimate at all

Answer 1

The Correct Option is B

The problem involves assessing whether Wind-on Ltd.’s conduct constituted fraud when providing an estimate for energy generation to Z Infrastructures Ltd. Let's analyze this using the given principle of fraud.

Principle: Fraud involves suggesting something is true when it is not, or concealing a fact with the intent to deceive another party.

Application to Facts:

• Wind-on Ltd. provided an estimate of 50 lakhs Kwh per turbine, clarifying it as an "estimate" and not a guarantee.
• Z Infrastructures was informed explicitly that the generation is dependent on wind availability.
• The turbines generated an average of 35 lakhs Kwh per annum, leading to Z Infrastructures’ dissatisfaction.
• The critical point is whether Wind-on had the intent to deceive, as per the legal definition of fraud.

Analysis:

• Wind-on's communication was transparent about the generation capabilities being estimates and not firm guarantees.
• For fraud to occur, Wind-on would need to have knowingly provided false information or concealed vital information intending to deceive Z Infrastructures.
• No evidence suggests Wind-on intended to deceive, as they communicated the uncertainties involved with the energy estimates.

Conclusion: The most appropriate answer is that Wind-on did not commit fraud as it was clearly specified that the energy generation was an estimate and not guaranteed. Therefore, the conclusion is: No, as Wind-on clearly specified that the energy generation figure was merely an estimate and it could not provide a guarantee.