Difference between fraud and misrepresentation has been provided in the Law of Contracts. The meaning of fraud can be derived from section 17 and the misrepresentation meaning can be found under section 18 of the Indian Contract Act, 1872.
When one party gives a false statement having knowledge that the statement is false and with the intention to deceive or mislead the other contracting party and make him enter into a contract, it is a fraud.
Whereas, when one party gives a false statement in the belief that the given statement is to be true and does not have an intention to deceive or mislead the other contracting party, it is a misrepresentation.
In this article, we will discuss some basic differences between fraud and misrepresentation under contract law.
Let’s discuss some key differences between fraud and misrepresentation;
| Fraud |
Misrepresentation |
|---|---|
| Intentionally, when one party gives a false statement of a material fact to influence the other party to enter into a contract is known as fraud. | Innocently, when one party gives a false representation /statement of a material fact in good faith to enter into a contract is known as misrepresentation. |
| In fraud, the statement is given intentionally. | In misrepresentation, the representation is made believing it to be true. |
| Fraud is made to deceive the other party. | Whereas, misrepresentation is not made to deceive the other party. |
| Fraud is defined under section 17 of the Indian Contract Act, 1872. | Misrepresentation is defined under section 18 of the Indian Contract Act, 1872. |
| In fraud, the party making the statement has knowledge of material fact but misled the other party by giving a false statement. | In misrepresentation, the party makes the representation of material fact believing it to be true. |
| Fraud by itself is a tort. | Misrepresentation by itself is not a tort. |
| The burden of proof always lies on the victim to prove the fraud intention of the party. | The burden of proof lies on the party to prove the good faith who has given a false representation of material fact. |
| In fraud, the victim can claim damages and recover any loss sustained. |
Whereas, in misrepresentation, the victim cannot claim damages for any loss. |
Conclusion
Therefore, the meaning of fraud and meaning of misrepresentation has been provided under sections 17 and 18 of the Indian Contract Act, 1872. The major difference between fraud and misrepresentation is the intention of the party. In fraud, the party gives a false statement with the intention to deceive the other contracting party whereas in misrepresentation the party gives a false statement in the belief it to be true and has no intention to deceive the other contracting party.
- Law of Contract – Bare Act 2021 Edition Professional
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- Law of Contract & Specific Relief Dr Avtar Singh Latest Edition-2020
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- CONTRACT Paper-II – By R. K. Bangia
- NOTES ON INDIAN CONTRACT ACT 1872: BEST NOTES FOR LAW STUDENTS
