3 Important Cases when Silence is Considered to Fraud in India

Important cases when the silence is considered to fraud are as follows:

Every silence is not a fraud. According to Sec. 17, Mere silence as to the facts does not amount to fraud. A party to the contract is owing no gratitude to disclose the whole truth to the other party.

The Rule of Caveat Emptor is applicable here that is Buyer Beware principle. This principle means that the buyer should be aware of things while making the contract. In these cases there is no duty to speak and silence does not result to fraud. When both the parties are aware of the contract, there is no duty to disclose the facts.

Exception:

The silence amounts to fraud in the following cases, namely:

1. Duty to speak:

Mere silence amounts to fraud when the person keeping silent, is under a duty to speak. The duty to speak arises, where one party reposes trust and confidence in the other.

Circumstances where it is the duty of the person keeping silence to speak are:-

1. In contracts of uberimae-fide (contract of utmost faith)

2. In contracts of fiduciary relations.

3. Contract of guarantee.

4. Customary contract.

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2. Where silence is equivalent to speech:

Sometimes, the silence is equivalent to speech. In such cases, the silence of a person amounts to fraud e.g., where a person keeps silent, knowing that his silence is going to be deceptive, he is guilty of fraud.

3. Half truths:

The silence may amount to fraud when a person discloses only the half truth and then keeps silent. A person may become guilty of fraud by non-disclosure also if he voluntarily discloses something and then stops half the ways. A person may keep silent. But if he speaks, he is duly bound to disclose the whole truth.