CHANAKYA NATIONAL LAW UNIVERSITY

A rough draft for partial fulfillment of project of Law of Contracts - I

on

“Disclosure of Facts: Effect of Fraud upon Contract”

Submitted to:

Mrs. Sushmita Singh

(Faculty of Law)

Submitted by:

Adya Sharma

Roll number: 211910

1st year, B. A. LL. B. (Hons.)

INTRODUCTION

Fraud through non-disclosure of facts involves the defendant concealing or omitting certain facts
which were relied upon by plaintiff. It is actually created by a duty to disclose amongst the
parties. If and when there is a duty to disclose certain information, but the party fails to disclose
it, the non-disclosure by Defendant may be just as misleading as making a positive
misrepresentation to the Plaintiff.

The element of fraud in a contract vitiates the contract and such a contract by fraud is voidable at
the option of the aggrieved party. Very often facts are misrepresented, that is, they are declared
in a distorted manner. When facts are intentionally misrepresented, it is known as fraud, which is
dealt with in Section 17 of the Indian Contract Act. However, unintentional or innocent
misrepresentation is not fraud. They are simply misrepresentation falling under Section 18 of the
Act. Thus, where a false statement is made intentionally, with the knowledge that it is false, with
a view to deceive the other party and thereby inducing him into entering the contract – it is
known as fraud.

But when the person making the false statement believes the statement to be true and does not
intend to deceive the other party to enter into the contract – it is known as misrepresentation.
Thus it can be said that fraud is a willful misrepresentation or a fraudulent misrepresentation and
includes all the acts committed by a person to deceive the other.

AIMS AND OBJECTIVES

1. To understand the basic concept of fraud.

2. To examine the essentials that constitutes liability under such cases.
3. To know the concepts of non-disclosure of facts and its implication on the nature of
contracts.
4. To analyze the principle of non-disclosure of facts within the ambit of fraud with the help
of related case laws.
RESEARCH METHODOLOGY

The researcher has used doctrinal methods based on proposition for research. The sources of data
for doctrinal research are the law library, case laws, judgments, law journals, internet etc.

SOURCES OF DATA

Primary sources – Judgments, Acts, Laws

Secondary sources – Books, Newspapers, Articles, Journals

TENTATIVE CHAPTERISATION

1. Introduction
2. Essentials for fraud
3. Mere silence vis-a-vis fraud
4. Exceptions to the principle
5. Damages of fraud
6. Relevant case laws
7. Case studies
7.1. Non-disclosure in cases of insurance
7.2. Buyer-seller relationship
8. Conclusion
LIMITATIONS OF THE STUDY

Since the “Law of Contracts” is covered by the Indian Contract Act, 1872 and The Specific
Relief Act, 1963 in our country, the researcher has territorial and monetary limitations in
completing the project at hand. Moreover, taking the time into consideration, the researcher has
to rely upon the doctrinal method of research.

BIBLIOGRAPHY

1. https://www.legalbites.in/contract-law-notes-fraud-misrepresentation-mistake/
2. Anthony T. Kroman, Mistake, Disclosure, Information, and the Law of Contracts,
CHICAGO UNBOUND, 1978.
3. Melvin A. Eisenberg, Disclosure in Contract Law, Vol. 91, Calif. L. Rev., 2003.
4. Nargis Yeasmeen, Consequences of Non-Disclosure in the Contract of Insurance, Vol.
17, IOSR Journal of Business and Management, 2015.
5. https://www.samemerick.com/fraud-by-non-disclosure-in-texas-collections/
6. https://www.linkedin.com/pulse/what-fraud-indian-contract-act-tanay-saraf/