Passage Summary: To commit fraud by this rule, you have to know something is broken but say it's fine. Wilton said a bike was fine when he didn't really know if it was or not, and it turned out to be broken, so the author calls it fraud.

Conclusion: Wilton was guilty of fraud.

Reasoning: A principle defines fraud as selling a known defective item while claiming it's sound; Wilton sold a bike with bad brakes while claiming it was good, even though he didn't actually know its condition.

Analysis: The application fails to meet the strict requirements of the principle. The principle requires that the seller *knows* the item is defective. However, the application states that Wilton 'knew very little' about the bike's condition. While Wilton was certainly being dishonest about his knowledge of the bike's quality, he didn't necessarily know it was defective at the time of the sale. Look for an answer that highlights the difference between 'not knowing the condition' and 'knowing the item is defective.'