FRAUD Section 17S17 defines fraud to mean acts done with intention to deceive

Fraud section 17s17 defines fraud to mean acts done

This preview shows page 11 - 13 out of 14 pages.

FRAUD – Section 17 S17 defines fraud to mean acts done with intention to deceive or induced the other party to enter into a contract. This section gives 5 different kinds of fraudulent acts: (Letchumy v Annamalay) (a)Suggesting a fact by one who knows that it is not true(b)the active concealment of a fact by one having knowledge of the fact;(c)a promise made without any intention of performing it;(d)committing any other act fitted to deceive, and (e)any such act or omission as the law specially declares to be fraudulent.Section 18 (a)defines misrepresentation as:‘the positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true’.-In the case of innocent misrepresentation, there is no element of fraud or negligence present. The maker of the false statement honestly believes that his statement is true, but however it turns out to be untrue.Negligent misrepresentation:Section 18 (b)defines negligent misrepresentation as:‘any breach of duty which, without an intent to deceived, gives an advantage to the person committing it, or anyoneclaiming under him, by misleading another to his prejudice, or to the prejudice of anyone claiming under him.’-In negligent misrepresentation, there is no intention to deceive the other contracting party, and the maker honestly believes in what he had represented, but he failed to take adequate care at the time of making the statement e.g. where the party making the statement is careless as to its truth – Case: MISREPRESENTATION - Section 18 - Misrepresentation means a false statement made by one party (representor) which induces the other party (representee) to enter into a contract. 3 main ingredients essential to prove misrepresentation: a. Nature of statement b. Was the statement material? c. Was the plaintiff induced? Innocent misrepresentation:
Image of page 11
- Hedley Byrne v Heller & Partners. HB contacted A’s banker HP for references. The bank gave a favorable report of A’s credit-worthiness. HP bank headed the document “Without Responsibility”. HB relied on the misleading report and gave substantial credit to A and later suffered heavy loss when A went into liquidation. HB sued HP bank in negligence. - Held: Where a person (HP bank) is so placed that others would rely on his judgment, then he has a duty of care to that others to give the right information. MISTAKE – sections 21 (void) & 23 (valid) Mistake by both parties Section 21 states that where there is a mistake by both the parties, the agreement is void if both parties are under a mistake as to a matter of fact essential to the agreement. The 2 key elements that must be satisfied under Section 21 are – (i) that both the parties are under a mistake as to a matter of fact, and (ii) the matter of fact is essential to the agreement’ - Raffles v Wichellhaus: The parties had an agreement for the sale of a cargo of cotton arriving from London by a ship called ‘The Peerless’ sailing form Bombay. Unknown to the parties there were two ships of the same name both leaving from Bombay at different times. One party was thinking about the Peerless sailing in October while the
Image of page 12
Image of page 13

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture