Where one party is ignorant of the subject matter of the contract, the law requires the other to disclose all the material facts of which he has knowledge. So also .if goods are bought in reliance upon the judg ment of the seller, and the buyer finds that goods are shipped to him which he did not intend to buy, he is not bound by his contract. If a man buys a quan tity of goods and he intends to buy one hundred pieces, and the other party thinks that he is buying five hundred pieces, or the buyer thinks that he is pay ing $1 and he is actually charged $2, there has been no consent as to the subject matter of the contract, and the contract is voidable. So if a man buys plated goods in mistake for silver, or buys a modern repro duction which he thinks is an antique, he may have the contract set aside. If a person pays down a sum of money for some secret process, say, for the man ufacture of ginger ale, and it turns out that there is no secret, he will not be bound. It is different if a man buys a picture from a dealer by some unknown painter, and he believes it to be a Rembrandt, with out the dealer's declaring it to be a picture by Rem brandt. The buyer will then be bound. There was no guarantee, and the buyer bought in doubt. His purchase was really a speculation.
A contract is not necessarily invalid because there has been a mistake of expression. The expression may be corrected, where the minds of the parties have met, but their intention has not been exactly set out. A mistake of law does not void a contract. Thus a man may make a contract by which he sells a certain thing, and by law the sale of it carries with it its ac cessories; he cannot have the contract set aside on the ground that he did not intend that the accessories should go with the thing sold. He may accept a suc cession, ignorant of the fact that by accepting it he accepts also the liabilities attached thereto.
13. Misrepresentation and constitute misrepresentation or fraud sufficient to set aside a contract, there must be proof of an intention to de ceive; there must be proof that artifice was used by one party, or with his knowledge, to induce the other to contract. An innocent misrepresentation in most cases will not be sufficient, tho in a contract of insur ance, and sometimes as between persons who stand in a confidential relation, the innocent misrepresentation, if material, will render the contract null. Fraud gen erally includes misrepresentation. If there is present a dishonest intention on the part of the person who makes the misrepresentation, or recklessness equiva lent to dishonesty, fraud will be easily found, because the mistake of the one party has been induced by the deliberate words or conduct of the other.
Fraud has been defined as a false misrepresentation of a material fact, made with knowledge of its falsity, or in reckless disregard of its truth or falsity, intend ing that it be acted upon by another who relies upon the statement, acts to his injury. The failure to dis close material facts, where there was a plain duty to disclose them, may amount to fraud.
The representation may be made by express words or by conduct. It may be a positive assertion, or merely a suggestion of what is false, and relate to a particular fact or a general state of things.
It is characteristic of a misrepresentation tainted with fraud or deceit, that it is made without positive belief in its truth; there may not be positive knowl edge of its falsehood. Thus a person may, in igno rance of its truth or falsehood, make a material repre sentation which proves to be false. In such case, his ignorance will be treated as equivalent to knoWledge of falsehood. It was remarked in an English case that "if persons take upon themselves to make as sertions on subjects of which they are ignorant, whether they are true or untrue, they must in a civil point of view be held as responsible as if they had as serted that which they knew to be true." As to the effect of silence, it has been held that it is equivalent to misrepresentation, if the withholding of that which is not stated makes that which is stated absolutely false.
It was said by Lord Campbell that "a single word or nod or wink, or a shake of the head, or a smile from the purchaser, intending to induce the vendor to be lieve the existence of a non-existent fact, might be fraud." Thus if A has a picture which he considers valuable, and he thinks it is a Rembrandt, and takes it to a dealer who, knowing that it is a Rembrandt, laughs at A's suggestion, and indicates that he does not think it is a Rembrandt, and thus induces A to sell it to him for a trifling amount, A, if he finds out that the picture is actually a Rembrandt and that the dealer is disposing of it as such, can recover his picture.
A person who complains of fraud or misrepre sentation must not only prove it, but also that it was false in fact; that the person who made it knew that it was false, or made it recklessly without knowing whether it was true or false; that he was induced by the misrepresentation to make the contract; and that within a reasonable time after he discovered the fraud, he repudiated the contract. He cannot act under the contract after he has knowledge of the fraud, and then demand to have the contract set aside.