Question

PRINCIPLE: Mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud, unless the circumstances of the case are such that, regard being had to them, it is the duty of the person keeping silence to speak, or unless his silence is, in itself, equivalent to speech.
FACT: A sells, by auction, to B, a horse which A knows to be unsound. A says nothing to B about the horse’s unsoundness.

• A. : A can be held liable for fraud
• B. : A can be held liable for misrepresentation
• C. : A cannot be held liable, because he did not say anything positive about the soundness of horse.
• D. : A cannot be held liable because it is the buyer who must be aware of the things.

Hint:

Unless specifically required to speak, mere silence about a known fact does not constitute fraud in a contract.

Answer 1

The Correct Option is C

Silence does not amount to fraud unless there is a duty to speak. In this case, A did not make any false representation or suppress facts where there was a legal obligation to disclose. Since silence alone is not equivalent to speech here, and A made no active assertion, he cannot be held liable under fraud or misrepresentation. \fbox{Final Answer: (C): A cannot be held liable}