*Difference between Fraud and Misrepresentation

Fraud is defined as fraudulent conduct done knowingly by one party to persuade the other party to enter into the contract the intention of the person is to commit a crime with a intention to harm other person physically, Financially, Mentally. Misrepresentation is the act of making an innocently false statement in an effort to get another party to sign a contract. The  intention is just make the opposite person sign the document not to harm him,

Fraud definition: Fraud can be defined as the deliberate and wilful representation of false information to deceive the other party and make them enter into a contract.

Fraud occurs when one person actively conceals a fact or set of facts from another party while knowing those facts to be true and existing. To prove fraud, you must show that there was an intentional act to cause harm. Let’s go through an example to understand the term “fraud” in a better way.

Fraud example: Rahul buys goods worth Rs. 3000 from Ajay, a shopkeeper. Rahul informs Ajay that he will shortly pay the amount of the goods, as he cannot do so because of some financial difficulties. Ajay believes it and allows Rahul to purchase the goods on credit. Rahul, on the other hand, has no intention of repaying Ajay. This type of activity is then considered fraud.

What is misrepresentation? 

Misrepresentation definition: Misrepresentation can be defined as an unintentional act of providing false information to the other party.

Misrepresentation happens when a party who believes a fact or information to be true conveys the same information to another party without ulterior motives. The other party relies on the statement or information and enters the contract. But, later, it was found that the passed-on or conveyed information was false.

It is important to remember that in misrepresentation, both parties are unaware that the information is false and enter into a contract assuming it is true. Let’s go through an example to understand the term “misrepresentation” in a better way.

Misrepresentation example: Rahul offers a deal to Ajay, and the deal is to purchase his car, which is in excellent condition. After thinking for a while, Ajay purchases it in good faith. But after several days, the car started to malfunction, and because of this, Ajay had to pay for the car repair cost. So, this act will amount to misrepresentation as Rahul believed that the car worked properly and was unaware of any defects in his car. But, he was wrong, and the information he provided to Ajay was false that his car was in excellent condition.

Key differences between fraud and misrepresentation

Some of the key differences between fraud and misrepresentation are:

The Indian Contract Act of 1872 defines fraud in Section 17 and misrepresentation in Section 18.

The purpose of misrepresentation is not to deceive the other party, whereas the purpose of fraud is to deceive the other party.

In the event of fraud, the harmed party may sue for damages. In the case of misrepresentation, however, the harmed party cannot sue for damages.

In fraud, the party making the representation is aware of the truth, but in misrepresentation, the party is unaware of the truth.

Fraud can be defined as the deliberate and willful representation of false information to deceive the other party and make them enter into a contract. Whereas misrepresentation can be defined as an unintentional act of providing false information.