Defence that the Contract was procured by the Fraud of the

Plaintiff.

The defendant was induced to make the alleged agreement [or, to accept, or, indorse the bill, or, to make the promissory note, or, to give the alleged guarantee, or, to execute the alleged deed] by the fraud of the plaintiff.

Particulars of the fraud are as follows:

As a general rule the fraud necessary to entitle the defrauded party to rescind a contract must be that of the other contracting party or his agent, but the rule is not without exception, for a person who has made an application to a company for shares based upon a prospectus issued by the promoters of the company before its formation and has had his application accepted by the allotment of shares to him may rescind the contract if he discovers that the representations in the prospectus which induced him to apply were untrue. (In re Metropolitan Coal Assoc., (1892) 3 Ch. 1, 13; 61 L. J. Ch. 741; Lynde v. Anglo-Italian Hemp Co., (1896) 1 Ch. 178; 65 L. J. Ch. 96.)

Where the defendant has been induced to enter into a contract by relying on material misrepresentations made by the plaintiff for the purpose of inducing the defendant to enter into such contract, the plaintiff cannot set up, by way of reply to a defence of fraud, that the defendant had means of knowledge on the subject, and would have learnt the real facts but for his negligence in not making sufficient inquiry. (Redgrave v. Hurd, 20 Ch. D. 1; 51 L. J. Ch. 113; Venezuela Ry. Co. v. Kisch, L. R. 2 H. L. 99.) As to what amounts to "inducing," see Ib., and Edgington v. Fitzmaurice, 29 Ch. D. 459. Innocent misrepresentations not amounting to such fraud as would found an action of deceit may be an equitable ground for rescinding a contract. (Arkwright v. Newbold, 17 Ch. D. 301; Adam v. Newbigging, 13 App. Cas. 308; 57 L. J. Ch. 1066; see 'Mistake," post, p. 788; "Sale of Land," post, p. 820.)

In an action to recover damages for fraudulent representations, where the defendant sets up the Statute of Limitations, it is a good reply that the plaintiff did not discover, and had not reasonable means of discovering the fraud within six years before action, and that the existence of such fraud was fraudulently concealed by the defendant until within such six years. (See "Limitation, Statutes of," post, p. 770.)

In cases where fraud is relied upon by the defendant, it is sometimes advisable, not merely to plead the fraud by way of defence, but also to allege it by way of counter-claim, so as to entitle the defendant to claim damages or such further relief as may be required.

As to the defence that the contract between the plaintiff and the defendant was entered into for the illegal purpose of defrauding a third party, see Willis v. Baldwin, 2 Doug. 450; Jackson v. Duchaire, 3 T. R. 551; Mallalieu v. Hodgson, 16 Q. B. 689; 20 L. J. Q. B. 339; Britten v. Hughes, 5 Bing. 460; Begbie v. Phosphate, &c. Co., 1 Q. B. D. 679; 44 L. J. Q. B. 233; Scott v. Brown, (1892) 2 Q. B. 724; 61 L. J. Q. B. 738.

See further as to fraud, "Fraud," post, pp. 899 et seq.

Defence that the Defendant was induced to Contract by Fraud, and afterwards repudiated the Contract.

The defendant was induced to make the alleged contract [or, agreement] by the fraud of the plaintiff, and within a reasonable time after he had notice of the said fraud, and before he had received any benefit under the said contract [or, agreement], he repudiated and abandoned the same.

Particulars are as follows:-[here state particulars of the fraud and repudiation].

Defence to an Action for the Price of Goods sold and delivered, that the Defendant was induced to Purchase the Goods by Fraud, and returned them on Discovery of the Fraud.

The defendant was induced to buy the [horse] at the said price by the fraud of the plaintiff, and within a reasonable time after he had notice of the said fraud he repudiated the said purchase and returned the said [horse] to the plaintiff.

Particulars of the fraud are as follows:-[here state particulars, as for instance, The plaintiff at the time of the sale of the horse to the defendant represented to the defendant, for the purpose of inducing him to purchase the said horse, that the said horse was then sound, whereas the said horse was then unsound, as the plaintiff then well knew (here state the nature of the unsoundness).]

Defence to an Action by a Company for Calls, that the Defendant was induced to become a Shareholder by Fraud, and repudiated the Shares.

The defendant was induced to become a holder of the shares by the fraud of the plaintiffs, and within a reasonable time after he had notice of the said fraud, and before he had received any benefit from or in respect of the said shares or any of them, he repudiated and disclaimed the said shares and all liability in respect thereof.

Particulars are as follows:-[here state particulars of the fraud and repudiation].

FRAUDS, STATUTE oF (a).

Defence of the Statute of Frauds to an Action upon a Contract entered into before the coming into operation of the Sale of Goods Act, 1893, for the Sale of Goods for the price of £10 or upwards (b).

(R. S. C. 1883, App. D. Sect. IV.)

The 17th section of the Statute of Frauds has not been complied with.

(a) Where the defendant relies on the fact that the requirements of the Statute of Frauds or s. 4 of the Sale of Goods Act, 1893, have not been complied with, he must distinctly raise this defence by his pleading. (See O. XIX. rr. 15, 20, cited ante, pp. 546, 549; Olley v. Fisher, 34 Ch. D. 367; Clarke v. Callow, and Dawkins v. Lord Penrhyn, infra.

The defence must be pleaded in such a manner as to show distinctly that the defendant intends to rely upon the statute, and it is not sufficient merely to traverse allegations made by the plaintiff in anticipation of objections founded on the statute. (Clarke v. Callow, 46 L. J. Q. B. 53; Manchester Bank v. Cook, 49 L. T. 674.) It has been held in the Chancery Division that it is sufficient to state generally that the Statute of Frauds has not been complied with, and that the particular section relied upon need not be stated (see James v. Smith, (1891) 1 Ch. 384; and see the form cited from R. S. C. 1883, App. D., Sect. II., "Sale of Land," post, p. 821); but in actions in the Queen's Bench Division it would seem that the section relied upon should usually be specified (see the forms above cited from R. S. C. 1883, App. D., Sect. IV.). Where a particular section of the statute is referred to in the pleading, care should be taken that the section is that which is relied upon, for, if a wrong section is stated, an amendment at the trial or hearing may be refused. (See James v. Smith, supra.)

Where it cannot be gathered by reference to the statement of claim what is the ground of objection relied upon under a defence of the statute, it would seem correct that the allegation of non-compliance with the requirements of the statute should be preceded by a short statement of the nature of the contract, showing what is the objection intended to be raised under the statute. (See for an example of this mode of pleading, the last form given in the text.) It was held under the repealed Rules of 1875, that a defence founded upon the Statute of Frauds could not be raised by demurrer (see Catling v. King, 5 Ch. D. 660; 46 L. J. Ch. 384 ; Dawkins v. Lord Penrhyn, 4 App. Cas. 51, 58; Morgan v. Worthington, 38 L. T. 443), but must in all cases be pleaded as a defence; and it would seem that under the rules now in force, such defences should be pleaded as above mentioned, and not by way of an objection in law under O. XXV.

(b) By s. 17 of the Statute of Frauds (which is numbered as s. 16 in the Revised Statutes), it was enacted that "no contract for the sale of any goods, wares, or merchandises for the price of ten pounds sterling or upwards

Defence under s. 4 of the Sale of Goods Act, 1893, to an Action upon a Contract entered into subsequently to the coming into operation of the Act, for the Sale of Goods of the Value of £10 or upwards (c).

The 4th section of the Sale of Goods Act, 1893, has not been complied with.

shall be allowed to be good, except the buyer shall accept part of the goods so sold and actually receive the same, or give something in earnest to bind the bargain, or in part of payment, or that some note or memorandum in writing of the said bargain be made and signed by the parties to be charged by such contract or their agents thereunto lawfully authorized.”

By Lord Tenterden's Act (9 Geo. IV. c. 14), s. 7, it was enacted, with respect to the above section, that the said enactments shall extend to all contracts for the sale of goods of the value of 107. sterling and upwards, notwithstanding the goods may be intended to be delivered at some future time, or may not at the time of such contract be actually made, procured, or provided, or fit or ready for delivery, or some act may be requisite for the making or completing thereof, or reudering the same fit for delivery." These enactments do not apply to contracts entered into subsequently to the coming into operation of the Sale of Goods Act, 1893 (56 & 57 Vict. c. 71), but such contracts are governed by similar provisions in s. 4 of the last-named Act, as to which see the next note infra.

(c) The provisions of s. 17 of the Statute of Frauds (which is numbered 16 in the revised statutes), and of s. 7 of Lord Tenterden's Act have been repealed by the Sale of Goods Act, 1893 (56 & 57 Vict. c. 71), as from the commencement of that Act, subject to the proviso that such repeal shall not affect anything done or suffered, or any right, title, or interest acquired or accrued before the commencement of that Act, or any legal proceeding or remedy in respect of any such thing, right, title, or interest (see ss. 60, 63 of the Sale of Goods Act, 1893) and the following provisions of the last-mentioned Act have been substituted therefor.

By s. 4 it is enacted that:

"(1.) A contract for the sale of any goods of the value of ten pounds or upwards shall not be enforceable by action unless the buyer shall accept part of the goods so sold, and actually receive the same, or give something in earnest to bind the contract, or in part payment, or unless some note or memorandum in writing of the contract be made and signed by the party to be charged or his agent in that behalf.

(2.) The provisions of this section apply to every such contract, notwithstanding that the goods may be intended to be delivered at some future time, or may not at the time of such contract be actually made, procured, or provided, or fit or ready for delivery, or some act may be requisite for the making or completing thereof, or rendering the same fit for delivery.

(3.) There is an acceptance of goods within the meaning of this section when the buyer does any act in relation to the goods which recognizes a pre-existing contract of sale, whether there be an acceptance in performance of the contract or not.

(4.) The provisions of this section do not apply to Scotland."

See, further, as to sales of goods, "Sale of Goods," pp. 314, 809.

Defence to an Action upon a Contract within s. 4 of the Statute of Frauds, where the Statement of Claim shows that the Contract is within that Section (d).

(See R. S. C. 1883, App. D. Sect. IV.)

The 4th section of the Statute of Frauds has not been complied with.

For a like Form in an Action upon a Guarantee, see post, p. 716.

The like to an Action for Wrongful Dismissal of a Servant, where it does not appear from the Statement of Claim, that the Contract was one which could not be performed within a Year from the making thereof (d).

The agreement was not to be performed within one year from the making thereof, and the 4th section of the Statute of Frauds has not been complied with.

Defence of the Statute of Frauds to an Action for Specific Performance: see" Sale of Land," post, p. 821.

(d) By s. 4 of the Statute of Frauds, it is enacted that "no action shall be brought whereby to charge any executor or administrator upon any special promise to answer damages out of his own estate' (see "Executors," ante, p. 204), " or whereby to charge the defendant upon any special promise to answer for the debt, default, or miscarriage of another person" (see “Guarantees,” ante, p. 212), “or to charge any person upon any agreement made upon consideration of marriage" (see Marriage," ante, p. 282), or upon any contract or sale of lands, tenements, or hereditaments, or any interest in or concerning them" (see “Sale of Land," ante, p. 323), or upon any agreement that is not to be performed within the space of one year from the making thereof" (see "Annuity," ante, p. 622), "unless the agreement upon which such action shall be brought, or some memorandum or note thereof, shall be in writing, and signed by the party to be charged therewith, or some other person thereunto by him lawfully authorized.”

The equitable doctrine with respect to part performance taking a case out of the statute, is applicable only in cases to which a court of equity would have applied it before the Judicature Acts. (Britain v. Rossiter, 11 Q. B. D. 123; 48 L. J. Q. B. 362; "Master and Servant," post, p. 786; and see Maddison v. Alderson, 8 App. Cas. 467; 32 L. J. Q. B. 737; McManus v. Cooke, 35 Ch. D. 681; 56 L. J. Ch. 662; Lavery v. Pursell, 39 Ch. D. 508; 57 L. J. Ch. 570.)

As to the distinction between a subsequent oral alteration of the contract and an acceptance of a substituted mode of performance, see Rescission," post, p. 808, and "Sale of Goods," ante, p. 320.