Xpert
11-30-2011, 06:10 PM
Fraud
Q. What is fraud? What is the suggestion of a fact not fraud but a misrepresentation? Explain it by giving examples. (1997) (1998)
1. Introduction:
Fraud is intentional misrepresentation. The parties of the contract should not conceal anything and not make false colour to the dealing. The term fraud includes all acts committed by a party to induce the other to enter into a contract with an intention to deceive other.
2. Definition of fraud:
According to contract act sec 17
Fraud means and includes any of the following acts committed by a party to a contract or with his connivance or by his agent.
(i) The suggestion, as a fact, of that which is not true, by one who does not believe it to be true,
(ii) The active concealment of a fact by one having knowledge or belief of the fact,
(iii) A promise made without any intention of performing it.
(iv) Any other act fitted to deceive and.
(v) Any such act or omission as he the law specially declared to be fraudulent.
3. Cases of fraud:
Following are cases of fraud in accordance with sec 17
(I) Suggestion regarding fact:
When a party to the contract makes a false statement intentionally he would be liable for fraud.
Exception:
If a person honestly believe his statement is to be true he can not be held liable for fraud.
Example:
A knows that his mobile is made Pakistan. In order to sell his mobile phone he tells that it is made of England B buys it. A is guilty of fraud.
(II) Active concealment of fact:
When the party to the contract material fact essential to the contract. He is guilty of fraud.
Example:
A sells a car to B the engine of the car is defective but A conceals it. A is guilty of fraud.
(III) Promise without intention of performing:
A promise without intention of performing amounts of fraud.
Example:
A purchases certain items from B without intention to pay him. A is guilty of fraud.
(IV) Any act with intention to deceive:
All the unfair ways which a man can adopt to deceive the other party will be considered fraud.
Example:
A tells B that his cow is pregnant on this suggestion B purchases cow. A is guilty of fraud.
(V) Any act or omission:
Any act or omission as the law specially declares to be fraudulent.
4. Essentials of fraud:
Following are the important essentials of fraud.
(I) False representation:
There must be false representation without representation there can be no fraud.
(II) Representation of a fact:
The representation must relate to a fact.
(III) Representation must be made before conclusion of contract:
The representation must be mad before conclusion of contract with the intention of causing the other party to enter into a contract.
(IV) Knowledge of falsity:
The representation must have been made with the knowledge of its falsity.
(V) Suffering of loss:
The other party acting on the representation must have suffered a loss.
(VI) The other party must have been deceived:
The other party must have been deceived.
(VII) The other party must have relied upon the representation:
The other party must have relied upon the representation which is made by fraudulent means.
5. Consequences of fraud:
A contract made by fraud is voidable at the option of the party defraud.
Case law
P. L. D 1969 SC 167
It was held that burden of proof lies on the party alleging fraud.
6. burden of proof:
The burden of proof that fraud was used lies on the party who wants to set aside the contract on plea of fraud.
7. Remedies:
Following remedies in case of fraud are available.
(I) To avoid the contract:
Party can avoid the contract but it must be done within reasonable time.
(II) Suit for damages:
Suit for damages can be instituted defrauded by party.
(III) Suit for specific performance:
Suit for specific performance can be filed.
8. Can silence be fraudulent:
According to sec 17 Mere silence as to facts likely to effect 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.
9. conclusion:
To conclusion it can be said that, fraud is willful and intentional misrepresentation. The contract is voidable at the option of aggrieved party. Fraud is committed wherever one man causes another to act on a false belief by representation which he does not himself believe to be true. Fraud can not be directly proved, it has to be inferred from surrounding circumstances and the conduct of the parties.
Q. What is fraud? What is the suggestion of a fact not fraud but a misrepresentation? Explain it by giving examples. (1997) (1998)
1. Introduction:
Fraud is intentional misrepresentation. The parties of the contract should not conceal anything and not make false colour to the dealing. The term fraud includes all acts committed by a party to induce the other to enter into a contract with an intention to deceive other.
2. Definition of fraud:
According to contract act sec 17
Fraud means and includes any of the following acts committed by a party to a contract or with his connivance or by his agent.
(i) The suggestion, as a fact, of that which is not true, by one who does not believe it to be true,
(ii) The active concealment of a fact by one having knowledge or belief of the fact,
(iii) A promise made without any intention of performing it.
(iv) Any other act fitted to deceive and.
(v) Any such act or omission as he the law specially declared to be fraudulent.
3. Cases of fraud:
Following are cases of fraud in accordance with sec 17
(I) Suggestion regarding fact:
When a party to the contract makes a false statement intentionally he would be liable for fraud.
Exception:
If a person honestly believe his statement is to be true he can not be held liable for fraud.
Example:
A knows that his mobile is made Pakistan. In order to sell his mobile phone he tells that it is made of England B buys it. A is guilty of fraud.
(II) Active concealment of fact:
When the party to the contract material fact essential to the contract. He is guilty of fraud.
Example:
A sells a car to B the engine of the car is defective but A conceals it. A is guilty of fraud.
(III) Promise without intention of performing:
A promise without intention of performing amounts of fraud.
Example:
A purchases certain items from B without intention to pay him. A is guilty of fraud.
(IV) Any act with intention to deceive:
All the unfair ways which a man can adopt to deceive the other party will be considered fraud.
Example:
A tells B that his cow is pregnant on this suggestion B purchases cow. A is guilty of fraud.
(V) Any act or omission:
Any act or omission as the law specially declares to be fraudulent.
4. Essentials of fraud:
Following are the important essentials of fraud.
(I) False representation:
There must be false representation without representation there can be no fraud.
(II) Representation of a fact:
The representation must relate to a fact.
(III) Representation must be made before conclusion of contract:
The representation must be mad before conclusion of contract with the intention of causing the other party to enter into a contract.
(IV) Knowledge of falsity:
The representation must have been made with the knowledge of its falsity.
(V) Suffering of loss:
The other party acting on the representation must have suffered a loss.
(VI) The other party must have been deceived:
The other party must have been deceived.
(VII) The other party must have relied upon the representation:
The other party must have relied upon the representation which is made by fraudulent means.
5. Consequences of fraud:
A contract made by fraud is voidable at the option of the party defraud.
Case law
P. L. D 1969 SC 167
It was held that burden of proof lies on the party alleging fraud.
6. burden of proof:
The burden of proof that fraud was used lies on the party who wants to set aside the contract on plea of fraud.
7. Remedies:
Following remedies in case of fraud are available.
(I) To avoid the contract:
Party can avoid the contract but it must be done within reasonable time.
(II) Suit for damages:
Suit for damages can be instituted defrauded by party.
(III) Suit for specific performance:
Suit for specific performance can be filed.
8. Can silence be fraudulent:
According to sec 17 Mere silence as to facts likely to effect 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.
9. conclusion:
To conclusion it can be said that, fraud is willful and intentional misrepresentation. The contract is voidable at the option of aggrieved party. Fraud is committed wherever one man causes another to act on a false belief by representation which he does not himself believe to be true. Fraud can not be directly proved, it has to be inferred from surrounding circumstances and the conduct of the parties.