410 WARRANTY 



culpability." Of course, a statement may be so utterly irrational, so 

 destitute of all reasonable foundation, as to furnish strong evidence of 

 dishonesty; but the mere fact that it is unreasonable does not per se 

 render it fraudulent. 



In giving his opinion in the above case of Derry v. Peck, Lord Fitz- 

 gerald refers with approval to the words of Popham, Chief-justice, in a 

 previous case: 



" That if I have any commodities which are damaged (whether victuals 

 or otherwise), and I, knowing them to be so, sell them for good, and affirm 

 them to be so, an action upon the case lies for the deceit; but although 

 they be damaged, if I, knowing not that, affirm them to be good, still 

 no action lies, without I warrant them to be good." "Popham", Lord Fitz- 

 gerald remarks, " had the reputation of being a consummate lawyer." It 

 should be observed that where a warranty is given, misrepresentation alone, 

 where it forms part of the warranty, even though not fraudulent, might 

 be a sufficient ground for rescinding the contract. 



Fraud may conveniently be divided into three kinds : 



(1) Misrepresentations tainted with fraud. 



(2) Industrious concealment of defects. 



(3) Suppression of material facts. 



Of these (l) and (2) may be said to constitute positive, (3) negative 

 fraud. 



The first kind of fraud has already been alluded to in the foregoing 

 remarks. A false statement of this nature, it would appear, will only 

 amount to a fraud in horse warranty when it forms a material part of 

 the contract, or when, as above noticed, it is made during actual treaty. 

 It may be generally remarked that no statement, fraudulent or otherwise, 

 antecedent to treaty, or made after a bargain has been struck, will affect a 

 warranty. 



Examples of the second kind of fraud are the stopping up of " sand 

 cracks", painting over of broken knees, or any similar trick or device 

 to induce a sale or obtain a higher price. A fraud of this kind would 

 vitiate even a sale expressed to be "with all faults". 



The third kind of fraud, suppression of material facts, would seem 

 to apply to horse warranty only where the buyer has no power of in- 

 spection, and relies upon the integrity of the seller. There it would 

 appear to be of the essence of the contract that the seller shall disclose all 

 material facts. Generally, however, the rule of caveat emptor applies, 

 and the vendor is under no obligation to disclose faults which a purchaser 

 may discover for himself. In Peck v. Gurney (L.R. 6, H.L. 403), which 



