Section 17 – THE INDIAN CONTRACT ACT, 1872

“Fraud” means and includes any of the following acts committed by a party
to a contract, or with his connivance, or by his agent1
, with intent to deceive another party thereto of his
agent, or to induce him to enter into the contract:—
(1) the suggestion, as a fact, of that which is not true, by one who does not believe it to be true;
(2) the active concealment of a fact by one having knowledge or belief of the fact;
(3) a promise made without any intention of performing it;
(4) any other act fitted to deceive;
(5) any such act or omission as the law specially declares to be fraudulent.
Explanation.—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 speak2
, or unless his silence is, in itself, equivalent to speech.
Illustrations
(a) A sells, by auction, to B, a horse which A knows to be unsound. A says nothing to B about the horse‟s unsoundness. This
is not fraud in A.
(b) B is A‟s daughter and has just come of age. Here, the relation between the parties would make it A‟s duty to tell B if the
horse is unsound.
(c) B says to A—“If you do not deny it, I shall assume that the horse is sound.” A says nothing. Here, A‟s silence is
equivalent to speech.
(d) A and B, being traders, enter upon a contract. A has private information of a change in prices which would affect B‟s
willingness to proceed with the contract. A is not bound to inform B.