Section 17 of ICA : Section 17: "Fraud" Defined

Explanation using Example

Imagine a situation where a real estate agent, Raj, sells a house to Priya. During the negotiations, Raj explicitly states that the house is free from any legal disputes, knowing fully well that there is an ongoing legal battle over the property's ownership. Priya believes Raj and proceeds to buy the house based on this assertion.

In this scenario, Raj's statement falls under the first act of fraud as defined in Section 17 of The Indian Contract Act, 1872, because he suggested as a fact something he knows to be untrue, with the intention of deceiving Priya into entering the contract to purchase the house.

If later Priya discovers the legal dispute, she could potentially void the contract on the grounds of fraud and seek compensation for any losses incurred due to Raj's deceptive act.