where a telegraph company, by mistake in a transmission caused B to ship to England a large quantity of barley which was not required, and which resulted in a heavy loss, it was held that the representation not being false to the knowledge of the company, gave no right of action to B.

(c) The representation must relate to a fact, and not a mere matter of opinion.

A mere expression of opinion, which turns out to be unfounded, will not invalidate a contract. A representation by the seller that property is worth a given sum is a mere expression of opinion, but a false statement as to the cost of an article is a material fact and fraudulent.

(d) The representation must be made with the intention that it should be acted upon by the injured party.

It is not necessary that the statements be made directly to the injured party. Thus, false statements made by a man to a commercial agency concerning his financial solvency, or that of his firm, entitles the person who relied upon them to all the remedies of a defrauded party.

(e) The other party must have relied on the representation and thereby have been deceived.

A bought a cannon of B. The cannon had a defect, which made it worthless, and B had endeavored to conceal the defect by inserting a metal plug. A had never inspected the cannon. When he used it the cannon burst. It was held that B had not committed fraud, because the attempted fraud had no operation on A's mind.

The Court said: "If the plug, which it was said was put in to conceal the defect, had never been there his position would have been the same, for as he did not examine the gun or form any opinion as to whether it was sound, its condition did not affect him." Although this decision has been severely criticised by high authority, it is still the doctrine on the subject of fraud. Deceit which does not affect the conduct of a party can hardly create liabilities.

82. Effect and remedies. Rule: A contract procured by means of fraud is not void, but voidable at the option of the party upon whom the fraud was practiced.

The defrauded party has the following remedies:

1. He may affirm the contract and sue for damages or 2. He may avoid the contract.

If the person defrauded elects to avoid the contract, he must return, or offer to return, what he received under it. But if the thing received has perished, or is of no value, or for any good reason cannot be returned, then the defrauded party may avoid the contract without an offer to return.

Rule: If, after discovery of the fraud, the party does not rescind the contract within a reasonable time, his right to rescind will be lost.

Certain bonds of A held by B for safe keeping were sold by B and the proceeds used by him. With knowledge of the fact, A accepted and retained B's promissory note and others sent him by B for the amount of the value of the bonds sold, and A collected the interest on said note for two years. A subsequently sued B to recover the value of the said bonds upon the ground that B fraudulently contracted the debt, but it was held that the acceptance of the notes under all circumstances connected with it created a new contract between the parties, and operated as an affirmance and ratification of the fraud practiced by B.

83. Both parties guilty of fraud. Rule: If both parties have been guilty of fraud, neither can obtain relief on the contract.

But where both parties are not equally guilty, one having acted under circumstances of oppression, imposition, hardship, or undue influence, so that his guilt may be far less than his associate, then public policy may require that relief should be granted. Where a debtor paid a creditor a larger amount than he paid to his other creditors, in order to induce such creditor to sign a deed accepting a part of the debt due him in discharge of the whole, the debtor was entitled to recover back the such extra allowance.

1. Define mistake.

QUESTIONS

2. What is the effect of mistake on a contract?

3. Define misrepresentation.

4. What distinction should be made between misrepresentation and a mere statement of opinion?

5. Define fraud.

6. What are the characteristics of fraud?

7. What is the rule where the defect in the article contracted for is open

for inspection?

8. Is it necessary that the representation be made with the knowledge of its falsehood?

9. To what must the representation relate?

10. What is the effect of fraud on a contract?

11. What remedy has the defrauded party?

12. What is the rule of law where both parties have been guilty of fraud?

CASES

(GIVE REASONS FOR YOUR ANSWERS)

1. Plaintiff made a contract to sell certain timber land to the defendant, and represented that it contained seven million feet of fine lumber. The defendant sent a man to investigate. He mistook the location and reported that the tract contained an excellent lot of lumber. Unknown to either the plaintiff or the defendant the land had been stripped of timber. Can the plaintiff enforce the contract?

2. A sells a horse to B and represents the horse to be sound. Unknown to A the horse had the glanders. B on discovering the disease, returned the horse and demanded his money. Is B entitled to rescind the contract?

3. B in selling a farm to C made the statement that the land was worth $100.00 per acre. As a matter of fact the land was not worth $10.00 per

4. C sold goods to D and assured D that they were fast colors and that the colors would not run. The colors were not fast. Was B entitled to sue for a breach of warranty?

5. B sold C a quantity of clover seed. C sowed the seed and found that it was badly mixed with morning glory seed and C's field was overrun with morning glories greatly to C's damage. B had stated that the seed was pure clover seed. Is B liable for a breach of warranty?

6. A falsely represented to B that shares in certain silver mines were a profitable investment, and in reply to inquiries falsely asserted that he had invested a large amount in the shares and working capital of the said mines, whereupon B, at the solicitations of A, but not until he (B) had carefully investigated the mines, etc., and relying solely upon his own investigation, purchased a large number of shares, which proved to be in fact valueless. B brought action to recover of A $2,000.00 which he had paid him on the ground of A's false and fraudulent representations. Can he recover?

7. A, being part owner of a vessel, was authorized to appoint her master. B made application for the appointment. A agreed to appoint him in consideration that he would take one-fourth interest in the vessel at her cost price. A fraudulently represented the cost price of the vessel. Is A liable to B for the fraud?

8. A brought an action to recover damages alleged to have been sustained by means of false and fraudulent representations made to him by B, through which he was induced to purchase a half interest in the business of manufacturing artificial marble. The facts were that B represented he was doing a fine business and making money; that he had a contract with St. Vincent's Church for $4,000.00, one-half of which was profit; also a large contract at the Capitol at Washington, and a large contract for work with the B. & O. R. R.-that the business was a complete failure, and the representations made and through which A was induced to purchase were utterly false. Can he succeed?

CHAPTER VII

STATUTE OF FRAUDS

84. History. In 1676 the Parliament of England passed an act for the prevention of frauds and perjuries called the "Statute of Frauds." This act has been re-enacted in nearly every state in the Union, but they differ from the original English act and from each other sufficiently to make it necessary to refer to the statute of a particular state when a question is to be decided under the statute.

85. Provisions of the Statute of Frauds. The Fourth and Seventeenth Sections of this Statute deal particularly with contracts. They require that certain contracts to be enforceable shall be in writing and properly signed by the party against whom the contract is to be enforced or by his authorized agent. . The writing may be only a memorandum setting forth the important facts of the agreement, or these facts may be set forth in a series of letters, which taken together set forth the facts of the contract. Such memoranda of agreement, however, must include all the essential elements of a formal contract such as competent parties, legal subject matter, consideration, etc.

The Fourth Section of the Statute provides that in the absence of a written contract no action shall be brought:

1. Against any executor or administrator on his promise to pay out of his own estate that which is owing from the estate he is administering.

2. Against any person on his promise to answer for the debt, default or miscarriage of any other person.

3. Against any person upon promises made in consideration of marriage.

4. Against any person upon any contract for the sale of land, tenements, or any other interest in, or concerning lands.