Chap. VI.]

OBSERVANCE OF CONTRACTS.

215

we would that they should do to ourselves.” Moreover, “ Wherethe law cannot separate the honest from the fraudulent parts ofany transaction, it provides for its own imbecility, by sternly re-pudiating the whole.”*

By the rule of the common law, if there be an intentional con-cealment or suppression of material facts in the making of a con-tract, in cases in which both parties have not equal access to themeans of information, it will be deemed unfair dealing, and willvitiate and avoid the contract. There may be some difference inthe facility with which the rule applies, between facts and circum-stances that are intrinsic , and form material ingredients of thecontract, and those that are extrinsic, and form no componentpart of it ; though they create inducements to enter into thecontract, or affect the price of the article.

As a general rule, each party is bound, in every case, to com-municate to the other his knowledge of material facts, providedhe knows the other to be ignorant of them, and they be not openand naked, or equally within the reach of his observation. Thus,in the sale of a ship which had a latent defect known to the seller,and which the buyer could not by any attention possibly discover,the seller was held to be bound to disclose it, and the conceal-ment was justly considered to be a breach of honesty and goodfaith. So, if one party suffers the other to buy an article undera delusion created by his own conduct, it will be deemed fraud-ulent and fatal to the contract ; —■ as, if the seller, by his acts,produces an impression upon the mind of the buyer, that he ispurchasing a picture belonging to a person of great skill in paint-ing, which the seller knows not to be the fact, and yet suffersthe impression to remain, though he knows it materially enhancesthe value of the picture in the mind of the buyer. The sellermust not practise any artifice to conceal defects, or make anyrepresentations for the purpose of throwing the buyer off hisguard.

The same principle was declared by Lord Hardwicke, whenhe stated, that, if a vendor, knowing of an incumbrance upon anestate, sells without disclosing the fact, and with knowledge that

* Story, Conflict of Laws, p. 204. — Manuscript Lecture of Simon Green-leaf, Esq., Royall Professor of Law in Harvard University.