enable the other to avoid the contract if he
has relied on it, and it was in fact untrue, though it may have been made
at the time with honest belief in its truth. This is so wherever,
according to the common course of business, it is one party's business to
know the facts, and the other practically must, or reasonably may, take
the facts from him. In some classes of cases even inadvertent omission to
disclose any material fact is treated as a misrepresentation. Contracts
of insurance are the most important; here the insurer very seldom has the
means of making any effective inquiry of his own. Misdescription of real
property on a sale, without fraud, may according to its importance be a
matter for compensation or for setting aside the contract. Promoters of
companies are under special duties as to good faith and disclosure which
have been worked out at great length in the modern decisions. But company
law has become so complex within the present generation that, so far from
throwing much light on larger principles, it is hardly intelligible
without some previous grasp of them. Sometimes it is said that
misrepresentation (apart from fraud) of any material fact will serve to
avoid any and every kind of contract. It is submitted that this is
certainly not the law as to the sale of goods or as to the contract to
marry, and therefore the alleged rule cannot be laid down as universal.
But it must be remembered that parties can, if they please, and not
necessarily by the express terms of the contract itself, make the
validity of their contract conditional on the existence of any matter of
fact whatever, including the correctness of any particular statement. If
they have done this, and the fact is not so, the contract has no force;
not because there has been a misrepresentation, but because the parties
agreed to be bound if the fact was so and not otherwise. It is a
question of interpretation whether in a given case there was any such
condition.
Mistake.
Mistake is said to be a ground for avoiding contracts, and there are
cases which it is practically convenient to group under this head. On
principle they seem to be mostly reducible to failure of the acceptance
to correspond with the offer, or absence of any real consideration for
the promise. In such cases, whether there be fraud or not, no contract
is ever formed, and therefore there is nothing which can be ratified--a
distinction which may have important effects. Rel
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