Misrepresentation

An innocent misstatement or false statement is known as misrepresentation

section 18 of Act defines misrepresentation as:

“Misrepresentation” means and includes—

(1) the positive assertion, in a manner not warranted by the information of the
person making it, of that which is not true, though he believes it to be true;

(2) any breach of duty which, without an intent to deceive, gains an advantage to
the person committing it, or any one claiming under him; by misleading another
to his prejudice, or to the prejudice of any one claiming under him;

(3) causing, however innocently, a party to an agreement, to make a mistake as

to the substance of the thing which is the subject of the agreement.
 Positive assertion, i.e., an explicit statement of fact by a person which is not true
though he believes it to be true

When there is a breach of duty whereby the person making a a statement gains
some advantage at the cost of the other party,

Statement is false but made without intention to deceive it also amounts to

misrepresentation

Example- grantor of a licence is bound to disclose to the licensee any defect,

which is likely to be dangerous to the person or property of the licensee, of which
the grantor is aware but the licensee is not. Omission to make such a disclosure,
if it is without any intention to deceive, would amount to misrepresentation

Case law - derry vs peek

Difference between fraud and misrepresentation
1) Both in fraud and misrepresentation the statement is false but in fraud the false statement is
made by a person , who knows that it is false or does not believe in its truth, whereas
misrepresentation the person making the statement believes the same to be true.
2) In fraud, the intention of the person making a false statement is to deceive the other party and
induce him to enter into the contract on that basis. There is no such wrongful intention in case of
misrepresentation. It has been noted in Derry v. Peek; that when the statement, although false,
was made without any intention to deceive, it did not amount to fraud.
3) According to Section 19, when the consent of a party to the contract has been obtained either by
fraud or by misrepresentation, the contract is voidable at the option of the party whose consent
nas been so obtained. In other words, the contractual remedy for both is the same. In case of
fraud, however, there is an additional remedy available to the victim of fraud, i.e., an action for
damages. but no additional remedy available for misrepresentation in tort.
4) When there is misrepresentation by one party, the contract is voidable at the option of the other
party, but no such remeay available if the party seeking to avoid the contract had the mean of
discovering the truth with ordinary diligence. However, except case of fraudulent silence, a
person obtaining the consent of the other by fraud is not allowed to say other person had chance
to discover the truth