Difference Between Fraud and Misrepresentation

‘Fraud‘ means a willful misrepresentation of a material fact while

‘Misrepresentation‘ means a bonafide representation which is
false. The former is an untrue statement given by one party that
indues other party to enter to the contract, whereas the latter is the
statement of fact, made by one party, believing that it is true, then
this is innocent misrepresentation.
The main difference between fraud and misrepresentation is that,
fraud is done with an aim of deceiving others, which is not in the
case of misrepresentation. And, so misrepresentation does not
entitles the agrieved party cannot sue the other party for damages
but can avoid the contract. conversely, fraud entitles the aggrieved
party to avoid the contract and also file a suit against other party for
damages. Go through, with the article presented to you, to know
some more differences between these two.
Comparison Chart
BASIS FOR
MISREPRESENTA
COMPARIS FRAUD
TION
ON

Meaning A deceptive The

act done representation of
intentionall a misstatement,
y by one made innocently,
party in which persuades
order to other party to
influence enter into the
the other contract, is
party to known as
enter into misrepresentatio
the n.
contract is
known as
Fraud.

Defined in Section 2 Section 2 (18) of

(17) of the the Indian
Indian Contract Act,
Contract 1872
Act, 1872
BASIS FOR
MISREPRESENTA
COMPARIS FRAUD
TION
ON

Purpose to Yes No
deceive
the other
party

Variation In a fraud, In
in extent the party misrepresentatio
of truth making the n, the party
representa making the
tion knows representation
that the believes the
statement statement made
is not true. by him is true,
which
subsequently
turned out as
false.

Claim The The aggrieved

aggrieved party has no right
party, has to sue the other
the right to party for
claim for damages.
damages.

Voidable The The contract is

contract is not voidable if
voidable the truth can be
even if the discovered in
truth can normal diligence.
be
discovered
in normal
diligence.
Definition of Fraud
A false representation willfully made by a party to contract in order
to mislead the other party and inducing him to enter into the
contract is known as fraud.
The party making false representation has made it either knowingly
or negligently just to deceive the other party. The aggrieved party,
relied on the statement, believing it to be true and acted upon it,
which became a cause of loss to the aggrieved party. In addition to
this, the representation of the fact must be made before the
conclusion of the contract. Concealment of a material fact in a
contract also amounts to fraud, but mere silence does not amount
to fraud except where the silence is equivalent to speech or where it
is the duty of the person making the statement to speak.
Now the contract is voidable at the option of the aggrieved party,
i.e., he has the right to perform or terminate the contract. Apart from
that, any damages suffered by the injured party can also be claimed
as well as he can sue the other party in court.
Example: A purchased goods of Rs. 5000 from a shopkeeper B,
with the intent of not paying the money to B, this type of act
amounts to Fraud.
Definition of Misrepresentation
A representation of a material fact made by a party to contract who
believes it to be true, the other party relied on the statement,
entered into the contract and acted upon it which later on turned out
to be incorrect is known as misrepresentation. The representation is
made unintentionally and unknowingly, not to deceive the other
party but it became a reason of loss to the other party.
Now, the contract is voidable at the option of the injured party who
has the right to avoid his performance. Although, if the truth of the
material fact can be discovered by the aggrieved party in the normal
course, then the contract is not voidable.
Example: A says to B to purchase his car which is in a good
condition, B purchased it in good faith but after a few days, the car
did not function properly and B has to suffer a loss to repair the car.
So the act amounts to misrepresentation as A believes that the car
works properly but this is not so.
Key Differences Between Fraud and Misrepresentation
The major difference between fraud and misrepresentation are as
under:
1. Fraud is a deliberate misstatement of a material fact.
Misrepresentation is a bonafide representation of
misstatement believing it to be true which turns out to be
untrue.
2. Fraud is done to deceive the other party, but
Misrepresentation is not done to deceive the other party.
3. Fraud is defined in Section 17 and misrepresentation is
defined in Section 18 of the Indian Contract Act, 1872.
4. In fraud, the party making representation knows the truth
however in misrepresentation, the party making representation
does not know the truth.
5. In fraud, the aggrieved party can claim damages for any loss
sustained. On the other hand, in misrepresentation, the
aggrieved party cannot claim damages for any loss sustained.