distinction is between a representation which, when made, there is an intention to perform and one which, when made, there is no intention to perform.

§ 67. Statement of Legal Conclusions. False representations as to the law or legal effect of a contract cannot be fraudulent unless there are fiduciary relations between the parties or unless the false representation is as to the law of another State or country. Thus, a representation of a lessor of property that the lessee will have the right to sell intoxicating liquors therein is a mere legal conclusion, the untruth of which will not avoid the lease.36

If the false representation was of some fact which could not have affected the other party in deciding to enter into the contract, such fact was necessarily immaterial and its untruth is not a defense.

§ 68. Essentials of False Representation. If the false statement of fact was believed by the one making it to be true, it cannot be legal fraud, but is simply misrepresentation, which we have already considered. The fact that an alleged belief was based on insufficient or unreasonable grounds is simply evidence that the representation was made without belief in its truth. The ground of an alleged belief is a most important test of its reality. If the maker of a representation which he believes true, discovers it is false, before it is acted upon, but does not disclose it, he is guilty of fraud.37 It is not necessary that there be an intent to cheat or defraud in order to make a false repre-sentation a legal fraud when made with knowledge of its untruth. The knowledge of the untruth is sufficient to avoid the contract even though the intention was to accommodate or benefit the other party, or with the hope that no harm would result to him thereby.

Statements made recklessly or in ignorance of their truth or untruth, are equally fraudulent with those made with knowledge of their falsity. A statement of fact may be presumed to be based upon the personal knowledge of the 36 Gormely v. Association, 55 Wis. 350, 13 N. W. 242.

37 Loewer v. Harris, 57 Fed. 368.

one making it, unless it appears otherwise from the circumstances. The fraud in such cases is stated by the Supreme Judicial Court of Massachusetts to consist

"In stating that the party knows the thing to exist when he does not know it to exist; and if he does not know it to exist, he must ordinarily be deemed to know that he does not. Forgetfulness of its existence after a former knowledge, or a mere belief of its existence, will not warrant or excuse a statement of actual knowledge."38

§ 69. Intention in Making Representation. It is necessary that the representation be made with the intention that it be acted upon by the injured party, though it is not necessary that the representation shall have been directly made to him. Thus, a false representation made with the intention that it reach the ears of the injured party, is sufficient. So, where a merchant made a false statement of his financial resources to a mercantile agency, it was held that customers of the agency who were deceived thereby might avoid their contracts with such merchant on the ground of fraud.39

§ 70. Representation Must Be Relied Upon. A false representation cannot constitute fraud unless the injured party is thereby deceived. If he knew that the representation was untrue or if he acted upon his own investigation or knowledge or without regard to the false representation, it cannot be said that he relied on such representation. Thus, if the vendor of a horse should file his teeth in order to deceive a purchaser as to the horse's age, but the purchaser should not examine the horse's teeth or ask his age, it could not be said that the attempted fraud in any way induced the contract and it is certain that the purchaser would not be released thereby from paying. The same doctrine is well illustrated in a famous English case where a defect in a cannon, which made it worthless, had been concealed by the insertion of a gunmetal plug in the weak

38 Chatham Furnace Company v. Moffatt, 147 Mass. 403, 18 N. E. 168, 9 Am. St. Rep. 727.

39 Eaton Co. v. Avery, 83 N. Y. 31, 38 Am. Rep. 389.

spot. The buyer accepted the gun without inquiry or inspection. It burst when fired, but the court, holding that he was not exonerated from paying for it because the attempted fraud had no effect upon his mind, 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 would not affect him.'"40

The representation must have been one upon which the injured party had a right to rely. As to whether one has a legal right to rely absolutely upon a representation where the means of verification are easily within reach, is a question on which the authorities do not agree. The weight of authority is in accordance with the law as stated in a New York case, that

"Every contracting party has an absolute right to rely on the express statement of an existing fact, the truth of which is known to the opposite party, and unknown to him, as the basis of a mutual engagement; and he is under no obligation to investigate and verify statements, to the truth of which the other party to the contract, with full means of knowledge, has deliberately pledged his faith. ''41

On the other hand, it was said in the Supreme Court of the United States by Mr. Justice Field42 that

"Where the means of knowledge are at hand and equally available to both parties, and the subject of purchase is alike open to their inspection, if the purchaser does not avail himself of these means and opportunities, he will not be heard to say that he has been deceived by the vendor's misrepresentations.'

But the burden of proving that the injured party had full opportunity to inform himself or did not rely upon the representation or knew of its falsity, is always upon the person who made the false representation.

40 Horsfall v. Thomas, 1 H. & C. 90, 99.

41 Mead v. Bunn, 32 N. Y. 275.

42 Slaughter's Adm'r v. Gerson, 13 Wall. 379, 383, 20 L. ed. 627.

§ 71. "Puffs" as Representations. In certain cases, the law is uniform that full reliance must not be placed upon statements of a vendor. These cases are principally concerned with the commendatory statements of dealers by which they puff up the value and quality of goods to induce another to enter into a contract. Thus, the statement of a real estate agent that the land he was trying to sell was worth at least ten per cent more than he was asking, or the statement of a horse dealer that an animal he offered was a "fine roadster" and worth fifty dollars more than he asked, or the statement of an automobile dealer that the machine he sells is the "best on the market", is plainly merely "puffing", which would not lead one to purchase without inspection and investigation. But if the parties are in a fiduciary relation or where one has a peculiar right to rely upon the statements of the other, such representations may become material and fraudulent if false.

§ 72. Injury Must Result. A contract cannot be avoided on the ground of fraud unless injury has resulted to the party who was deceived. Thus, where one bought shares of stock in reliance upon a false representation, it was held that there was no legal fraud since the shares were worth as much as was paid for them.43 The one deceived must show "that he has been injured thereby-that he is, in some way, in a worse condition than he would have been had the words been true."'44 And if the statement, though false when made, is true at the time the contract is entered into, the misrepresentation can have no legal effect.

§ 73. Remedies of Defrauded Party. Upon discovery of the fraud, the injured party may either affirm or rescind the contract as he deems best. The contract is not void but only voidable because of the fraud and, therefore, no consideration is needed to make either an affirmation or a repudiation binding. If the injured party affirms the contract, he still retains his right of action in deceit for damages sustained from the fraud, but this separate right 48 Alden v. Wright, 47 Minn. 225, 49 N. W. 767.

44 Bartlett v. Blaine, 83 Ill. 25, 27.

of action may be waived upon full knowledge of the facts. Where the injured party elects to rescind the contract, he may resist any action brought for its breach or to enforce performance of it, or may have the contract cancelled in equity or recover the property conveyed by him. The right to rescind may be lost by a prior affirmance of the contract or by acting upon it or by acceptance of some benefit under it after learning of the fraud or by unreasonable delay in calling upon a court of equity to cancel the contract. And it is generally necessary that the party seeking to rescind the contract, shall place the other party in statu quo by the return of the consideration if possible without injustice to the injured party, unless the consideration has been destroyed or has passed from the injured party's control without his fault.

DURESS

Duress is unlawful restraint exercised upon a person whereby he is forced to do an act against his will. The apparent consent of a party to the agreement may not be real because given under actual or threatened and impending danger caused by the other party which has overcome the mind of the injured party. The contract is then voidable because of duress as in the case of fraud.

§ 74. What Constitutes. Duress of imprisonment arises where a person's liberty is actually restrained, whether by prison walls or otherwise. The imprisonment must be unlawful and the person imprisoned must be either the contracting party or his or her wife, husband, child, parent, or near relative. Duress per minas occurs where there is a threat of imprisonment, mayhem, or loss of life or limb of one of these persons. But a threat to take one's own life will not constitute duress, as where a husband threatened to poison himself unless his wife signed a note as surety.45

It was formerly the general rule that an agreement could not be avoided because of duress if made in consideration of the release of goods from unlawful destruction or detention, but now the courts generally hold a more liberal view. 45 Wright v. Remington, 41 N. J. Law 48, 32 Am. Rep. 180.