This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
To amount to fraud which will prevent the formation of a contract the false statement as to one of the essential elements of a contract must mislead the adversary party.1 If A, who is to convey land to B, points out the wrong tract, B is not entitled to rescission unless he has been misled thereby.2 If the maker of a written instrument is induced to sign it by a fraudulent representation as to its contents, but such maker discovers the real nature of such instrument before he executes and delivers it, his knowledge at the time of the execution and delivery is material, and not his knowledge at the time that he wrote his name; and such instrument is accordingly binding.3 If A draws a contract so as to impose a personal liability upon B, he can not claim to have been misled by B's statement that B was acting solely as agent for X.4
1 Sulkin v. Gilbert, 218 Pa. St. 255, 67 Atl. 415.
2 Sulkin v. Gilbert, 218 Pa. St. 255, 67 Atl. 415.
3 Greenleaf-Johnson Lumber Co. v.
Leonard, 145 N. Car. 339, 59 S. E. 134. 4 In re Miley, 187 Fed. 177.
To operate as fraud, the person against whom relief is sought must be guilty of the false statement, either in person or through an agent, or he must have taken advantage thereof, knowing that the adversary, party was relying thereon. A contract between a creditor and a surety is not rendered invalid by the fact that such surety was deceived as to the identity of the real principal, the creditor not knowing of such fraud and not taking advantage thereof.5