When does silence amount to fraud?

Mere silence without any duty to speak does not amount to fraud. Mere silence as regards material facts that the other party is not bound to disclose to the other, is not a ground for rescission or a defence to specific performance. Thus mere silence as to the facts does not amount to fraud, unless there is a duty to speak.

The Act lays down that if the consent was caused by misrepresentation or by silence fraudulent within the meaning of section 17 of the Act, the contract is not voidable if the party, whose consent was caused had the means of discovering the truth with ordinary diligence.

E.g.: A, by misrepresentation makes B erroneously to believe that 5000 Tons of detergent are made annually at A's factory. B examines the accounts of the factory that show the annual production as 4000 Tons. Subsequently B buys the factory.

The contract is not voidable on account of A's misrepresentation.

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