What Are The Effects of Fraud

When consent to an agreement is caused by fraud, the agreement is a contract voidable at the option of the party whose consent was so caused.

A party whose consent to an agreement was caused by fraud has two remedies, namely :

• ha may rescind the contract, or

• he may insist that the contract shall be performed and that he shall be put in the position in which have been, if the representation made had been true.
  

Example : A fraudulently informs B that A's estate is free from encumberance. B thereupon buys the estates. The estate is subject to a mortgage. B may avoid the contract or may insist on its carried out and the mortgage debt repaid by A.

Apart from the above, the person defrauded may obtain rescission, restitution or damages. The aforesaid remedies are subject to an exception. A contract cannot be avoided on the ground of misrepresentation or silence amounting to fraud., if a party to whom an untrue or misleading statement was made had the means of discovering the truth with reasonable diligence.