Question

Which of the following is landmark case dealing with effect of fraud in formation of a contract?

• A. Lalman Shukla v. Gouri Dutt (1913)
• B. Derry v. Peek (1889)
• C. Carlill v. Carbolic Smoke Ball Co. (1893)
• D. Satyabrata Ghose v. Mugneeram Bangur (1954)

Hint:

To remember the test from Derry v. Peek, think of the "three types of dishonesty" for fraud: knowingly lying, not believing your own statement, or being reckless about the truth.

Answer 1

The Correct Option is B

This question asks for the landmark case that defines fraud in the context of contract law.

Derry v.
Peek is the foundational English case that defines fraudulent misrepresentation (fraud).
The court held that fraud is proved when a false representation has been made (1) knowingly, or (2) without belief in its truth, or (3) recklessly, careless whether it be true or false.
This established a high bar for proving fraud.

The other cases deal with different principles: \textit{Lalman Shukla} with communication of offer, \textit{Carlill v.
Carbolic Smoke Ball} with general offers, and \textit{Satyabrata Ghose} with the doctrine of frustration.
Therefore, \textit{Derry v.
Peek} is the landmark case on fraud.