‘B’ says to ‘A’ If you do not deny it I shall presume that the horse is sound”. ‘A’ keeps silent. ‘B’ buys the horse. Advise ‘B’ if the horse is unsound.
If the horse is unsound, B can sue A for committing fraud and hence the contract is voidable at the option of B.
Explanation of Sec. 17 of the Indian Contract Act reads – Mere silence as to facts likely to affect the willingness/consent of a person to enter into a contract is not fraud. However, only if the circumstances of the case are such that it is the duty of the person keeping silence to speak or if he silence itself is equivalent to speech, then the person must speak.
In the above case, B has specifically put a suggestion to A that if A does not deny, B shall presume that the horse has sound. Here, the circumstances are such that it is the duty of A keeping silence to speak and still if A keeps silence, then such silence is equivalent to speech i.e., admission that B can presume that the horse is sound.
After purchase of the horse by B from A, the horse is found unsound and hence A has committed fraud on B. The contract is voidable at the option of B, besides claiming damages for fraudulent misrepresentation.
The facts of the case resemble the illustration (c) of Sec. 17 where it is stated that inspite of B’s enquiry with A about the soundness of the horse, if A keeps silence, it is equivalent to speech (admission that the horse is sound) and hence A is liable for fraud.