Section 17 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 17 defines "fraud" for the purposes of the Act. It lists five kinds of act, committed by a party to a contract, or with his connivance, or by his agent, with intent to deceive another party or his agent, or to induce him to enter into the contract. An Explanation says that mere silence is not fraud unless there is a duty to speak or the silence is itself equivalent to speech.
Fraud means any of five acts committed by a party, or with his connivance, or by his agent, with intent to deceive another party or his agent, or to induce him to enter into the contract: (1) suggesting as a fact what is not true, by one who does not believe it; (2) active concealment of a fact by one who knows or believes it; (3) a promise made without any intention of performing it; (4) any other act fitted to deceive; (5) any act or omission the law specially declares fraudulent. Mere silence is not fraud, unless there is a duty to speak or the silence is equivalent to speech.
Who commits fraud, and with what intent
The section says fraud is acts "committed by a party to a contract, or with his connivance, or by his agent, with intent to deceive another party thereto or his agent, or to induce him to enter into the contract". A footnote adds a cross-reference ("Cf. s. 238, infra") to a later section of the Act, which we cover in its own article.
Three points from the opening words:
- the fraud may be by the party, by someone with the party's connivance, or by his agent;
- it is directed at another party to the contract or his agent;
- the intent is either to deceive, or to induce the other to enter into the contract.
If you are dealing with a suspected fraud in a contract, our legal dispute resolution service can help you assess what the Act provides.
The five acts
| # | Act | Text |
|---|---|---|
| 1 | False suggestion | "the suggestion, as a fact, of that which is not true, by one who does not believe it to be true" |
| 2 | Active concealment | "the active concealment of a fact by one having knowledge or belief of the fact" |
| 3 | False promise | "a promise made without any intention of performing it" |
| 4 | Any other deceptive act | "any other act fitted to deceive" |
| 5 | Statutory fraud | "any such act or omission as the law specially declares to be fraudulent" |
1. Suggesting what is not true
The person suggests, as a fact, something untrue, and he does not believe it to be true. Disbelief is part of the definition. A statement the speaker believes to be true falls under a different section, misrepresentation (section 18), which we treat in a separate article.
2. Active concealment
The concealment must be active, and by a person "having knowledge or belief of the fact". It is more than staying quiet, which is dealt with in the Explanation.
3. A promise without intention to perform
A promise is fraud if made without any intention of performing it. The test looks at the maker's intention when he makes the promise.
4. Any other act fitted to deceive
This is a catch-all for acts which are "fitted to deceive". The text does not list examples.
5. Acts or omissions the law declares fraudulent
Other laws may declare certain acts or omissions fraudulent. Section 17(5) brings those into the definition. The Act does not list them here.
The Explanation: silence
The Explanation reads: "Mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud, unless the circumstances of the case are such that, regard being had to them, it is the duty of the person keeping silence to speak, or unless his silence is, in itself, equivalent to speech." A footnote refers to section 143 of the Act ("See s. 143, infra"), which we cover later in the series.
So there are two exceptions to the rule that silence is not fraud:
- a duty to speak, arising from the circumstances; or
- silence that is, in itself, equivalent to speech.
The Act's own illustrations
The Act gives four illustrations to section 17, restated in plain words.
(a) A sells, by auction, to B a horse which A knows to be unsound. A says nothing to B about the unsoundness. This is not fraud in A.
(b) B is A's daughter and has just come of age. Here the relation between the parties would make it A's duty to tell B if the horse is unsound.
(c) B says to A, "If you do not deny it, I shall assume that the horse is sound." A says nothing. Here A's silence is equivalent to speech.
(d) A and B, being traders, enter upon a contract. A has private information of a change in prices which would affect B's willingness to proceed with the contract. A is not bound to inform B.
Illustrations (a) and (d) show mere silence in ordinary dealings. Illustration (b) shows a duty to speak arising from the relation of the parties. Illustration (c) shows silence that is equivalent to speech because the other party has said how he will read it.
What follows from fraud
Section 17 is a definition. Under section 19, 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. That party may, if he thinks fit, insist that the contract be performed and that he be put in the position he would have been in if the representations made had been true. See our article on section 19. The test of "caused" is in section 14.
A modern example (ours, not the Act's)
Prakash runs an online store and sells his business to Lalita. During due diligence he tells her that monthly sales have been steady, though he knows that his main customer left three months ago and he believes the statement is false. That is a suggestion, as a fact, of what is not true, by one who does not believe it. In addition, he deletes from the shared folder a notice of termination from that customer: an act of active concealment of a fact he knows. Both fit section 17. By contrast, if Prakash simply did not mention a minor supplier delay that Lalita never asked about and nothing in their relation required him to speak, the Explanation says mere silence is not fraud, as in the Act's illustration (a).
What can the parties change?
The parties cannot agree that a fraud will not be a fraud. They can create a duty to speak by contract, for example by promising to disclose certain matters and giving representations. That may bring the Explanation's "duty to speak" into play on the facts, though how a contractual disclosure promise interacts with the section is not stated in the text. Buyers often ask sellers for written disclosures for this reason.
Practical points
- Do not say what you do not believe. The first limb turns on disbelief.
- Do not hide known facts. Active concealment is fraud under the second limb.
- Make promises you intend to keep. A promise made with no intention of performing it falls under the third limb.
- Ask for disclosures in writing. If silence is your concern, ask direct questions and record the answers.
Need help with a fraud allegation in a contract?
If you think you were deceived into a contract, or you face an allegation that you deceived someone, our legal dispute resolution team can look at what was said, what was hidden and what the Act provides, and explain your options.
Key takeaways
- Fraud means five kinds of act by a party, with his connivance or by his agent, with intent to deceive or to induce the contract (s.17).
- Active concealment and promises made without intention to perform are fraud.
- Mere silence is not fraud unless there is a duty to speak or the silence is equivalent to speech.
- Fraud makes the contract voidable at the option of the party whose consent was so caused (s.19).
Read next
- Section 16: undue influence
- Section 18: misrepresentation
- Section 19: voidable agreements
- Free consent: sections 13 to 22
Disclaimer: Based on the text of the Indian Contract Act, 1872 as consulted on 1 October 2026. Many questions under this Act turn on case law and on the wording of the particular contract, which this article does not cover. It is general information, not legal advice; check the official text and take advice before acting.