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.
Certain types of fraud, such as fraud as to an essential element of the contract,1 prevents the transaction from amounting to a contract in spite of its outward form. Other types of fraud, such as fraud as to a material matter which is not one of the essential elements of the contract,2 do not prevent the transaction from amounting to a contract, but render it voidable at the option of the party who has been misled. If the contract is not under seal, extrinsic evidence is admissible to show facts which amount to fraud,3 whether such fraud relates to one of the essential elements of the contract and prevents the transaction from amounting to a contract,4 or whether the fraud relates to a material fact which is not one of the essential elements of the contract and thus renders the contract voidable at the election of the party who has been misled.5 Extrinsic evidence is admissible to show fraud by which the maker was induced to execute a negotiable instrument if such negotiable instrument is not in the hands of a bona fide holder.6 Extrinsic evidence is admissible to show that a written contract of sale was entered into in reliance upon fraudulent representations,7 such as fraudulent representations as to the quality of the goods.8 Extrinsic evidence is admissible to show that a written contract for the sale of land was induced by fraudulent representations.9 The fact that a contract of fire insurance was entered into by reason of the representation of the agent of the insurer as to the meaning of a clause in an insurance policy which amounted to fraud, may be shown by extrinsic evidence.10 If an agent has been guilty of fraud against his principal, the fact of the agency may be established by extrinsic evidence, although by the terms of the written contract he is apparently acting as the adversary party.11 If an agent has made a secret profit in the purchase of property for his principal, the fact of his agency may be established by extrinsic evidence, although by the terms of the contract between the principal and the agent, the agent is treated as vendor of the realty which he is in fact to buy for his principal.12 The fact that a written contract provides that all the terms of such contract are contained in such writing does not prevent the introduction of extrinsic evidence for the purpose of showing fraud.13 Extrinsic evidence to contradict the contractual provisions of a contract is admissible only where there is an issue as to fraud, mistake, and the like, as to such contents.14 If the fraud which is alleged is fraud as to a material matter which is not one of the essential elements of the contract, extrinsic evidence is not admissible to contradict the contractual provisions of the contract.15 If the issue is as to fraud, in the terms of the contract itself, extrinsic evidence is admissible to show that a provision in a contract was inserted or omitted by fraud.16 In an action at law, however, such evidence can not be introduced for the purpose of reforming the contract and enforcing it if it is reformed.17
9 Rittenhouse-Winterson Auto Co. v. Kissner, 129 Md. 102, 98 Atl. 361.
10 Lawrence County Bank v. Arndt, 69 Ark. 406, 65 S. W. 1052; Southern, etc., Co. v. Ozment, 132 N. Car. 839, 44 S. E. 681. See ch. LXX.
11 Krueger v. Nicola, 205 Pa. St. 38, 54 Atl. 494.
1 See Sec. 224.
2 See Sec. 341 et seq.
'United States. El Dia Insurance Co. v. Sinclair, 228 Fed. 833, 143 C. C. A. 231; Burroughs Adding Machine Co. v. Scandinavian-American Bank, 239 Fed. 179.
Alabama. Commercial Finance Co. v. Cooper Bros., 196 Ala. 285, 71 So. 684.
Arkansas. Barker v. Lack, 120 Ark. 323, 179 S. W. 493.
California. Amer v. Hightower, 70 Cal. 440.
Georgia. Barrie v. Miller, 104 Ga. 312, 69 Am. St. Rep. 171, 30 S. E. 840; McCrary v. Pritchard, 119 Ga. 876, 47 S. E. 341.
Illinois. Race v. Weston, 86 111. 91.
Iowa. Jeez v. A. Y. McDonald Mfg. Co., 179 Ia. 193, 161 N. W. 62; Houge v. St. Paul Fire & Marine Ins. Co., 174 Ia. 607, 156 N. W. 862; Upham v. Mickleson (Ia.), 157 N. W. 264; Port Huron Machine Co. v. Davis (Ia.), 162 N. W. 228; Franke v. Kelsheimer, 180 Ia. 251, 163 N. W. 239.
Kansas. Griesa v. Thomas, 99 Kan. 335, 161 Pac. 670; Outcault Advertising Co. v. Smalley, 101 Kan. 645, 168 Pac. 677.
Louisiana. Ford v. Parsons, 142 La. 1093, 78 So. 128.
Massachusetts. Reagan v. Union Mut. L. Ins. Co., 189 Mass. 555, 2 L. R. A. (N.S.) 821, 76 N. E. 217.
Michigan. Lake Erie Land Co. v. Chilinski, 197 Mich. 214, 163 N. W. 929.
Minnesota. Vilett v. Moler, 82 Minn. 12, 84 N. W. 452; Edward Thompson Co. v. Schroeder, 131 Minn. 125, 154 N. W. 792; Kempf v. Ranker, 132 Minn. 64, 155 N. W. 1050.
Mississippi. Howie v. Pratt, 83 Miss. 15, 35 So. 216.
Montana. Petit v. Sinclier, 53 Mont. 317, 163 Pac. 467.
New Hampshire. Hoitt v. Holcomb, 23 N. II. 535; Cass v. Brown, 68 N. H. 85, 44 Atl. 86; Anderson v. Scott, 70 N. H. 350, 47 Atl. 607.
New Mexico. Pople v. Orekar, 22 N. M. 307, 161 Pac. 1110; Berrendo Irrigated Farms Co. v. Jacobs, 23 N. M. 290, 168 Pac. .483.
New York. Mayer v. Dean, 115 N. Y. 556, 5 L. R. A. 540, 22 N. E. 261.
North Carolina. American Potato Co. v. Jenette Bros. Co., 172 N. Car. 1, 89 S. E. 791.
North Dakota. Elliott Supply Co. v. Green, 35 N. D. 641, 160 N. W. 1002.
Oklahoma. McLean v. Southwestern Casualty Ins. Co., - Okla. - , 159 Pac. 660; Nickle v. Recder, - Okla. - , 166 Pac. 895; American Bankers' Insurance Co. v. Hopkins, - Okla. - , 169 Pac. 489; Hooker v. Wilson, - Okla. - , 169 Pac. 1097.
Oregon. Hetrick v. Gerlinger Motor Car Co., 84 Or. 133, 164 Pac. 379.
South Carolina. Parham-Thomas -McSwain v. Atlantic Life Ins. Co., 104 S. Car. 223, 88 S. E. 470.
South Dakota. Rosholt v. Woulph, - S. D. - , 167 N. W. 158 (obiter, as no fraud was shown).
Tennessee. Fine v. Stuart (Tenn. Ch. App.), 48 S. W. 371.
Utah. Swanson v. Sims, - Utah -, 170 Pac. 774.