Misrepresentation

It is a false statement which the person making it honestly believes to be true or which he does not know to be false. It also includes non disclosure of material fact or facts without any intent to deceive the other party. Acc. to Sec 18,there is misrepresentation a) When a person positively asserts that a fact is true when his information does not warrant it to be so,though he believes it to be true.

b) When there is any breach of duty by a person which brings an advantage to the person committing it by misleading another to his prejudice. c) When a party causes, however innocently, the other party to the agreement to make a mistake as to the substance of the thing which is the subject of the agreement.

Requirements of Misrepresentation It must be a representation of a material fact. It must be made before the conclusion of the contract with a view to inducing the other party to enter into the contract. It must be made with the intention that it should be acted upon by the person to whom it is addressed. It must have been actually acted upon and must have induced the contract.

It must be wrong but the person who made it honestly believed it to be true. It must be made without any intention to deceive the other party. It need not be directly made t the plaintiff. Ex Arpit says to Gursharan who intends to purchase his land, My land produces 2 tons of rice per acre.Arpit believes the statement to be true although he has no sufficient ground for the belief.Gursharan purchases Arpits land believing Arpits statement.Later on Gursharan finds that the land produces only 1.5 tons of rice per acre.Here arpits,s representation is Misrepresentation.

Consequences of Misrepresentations

a) b)

The aggrieved party ,in case of misrepresentation can Avoid or rescind the contract Accept the contract but insists that he shall be placed in the position in which he would have been if the representation made had been true.

Fraud exist when it is shown that a) A false representation has been made Knowingly, without belief in its truth, or recklessly whether it is true or false and the maker intended the other party to act upon it. b)There is a concealment of a material fact . Acc to Sec 17,fraud means and includes any of the following acts committed by a party to a contract or by his agent with intent to deceive or to induce a person to enter into a contract ;

Fraud

a)

b)

c) d) e)

The suggestion that a fact is true when it is not true and the person making the suggestion does not believe it to be true. The active concealment of a fact by a person having knowledge or belief of the fact. A promise made without any intention of performing it. Any other act fitted to deceive Any such act or omission as the law specially declares to be fraudulent.

Example ; Aditya fraudulently informs Athar that Adityas estate is free from encumbrance.On the faith of Aditya,Athar buys the estate.Actually the estate is subject to mortgage.Here,Athar may avoid the contract because Aditya with the intention to deceive Athar induced