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12/8/2017 Difference Between Fraud and Misrepresentation (with Examples and Comparison Chart) - Key Differences

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Di erence Between Fraud and


Misrepresentation
April 13, 2015 By Surbhi S 3 Comments

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.

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12/8/2017 Difference Between Fraud and Misrepresentation (with Examples and Comparison Chart) - Key Differences

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.

Content: Fraud Vs Misrepresentation


1. Comparison Chart
2. Definition
3. Key Differences
4. Conclusion

Comparison Chart

BASIS FOR
FRAUD MISREPRESENTATION
COMPARISON

Meaning A deceptive act done The representation of a


intentionally by one party misstatement, made
in order to influence the innocently, which persuades
other party to enter into the other party to enter into the
contract is known as Fraud. contract, is known as
misrepresentation.

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12/8/2017 Difference Between Fraud and Misrepresentation (with Examples and Comparison Chart) - Key Differences

BASIS FOR
FRAUD MISREPRESENTATION
COMPARISON

Defined in Section 2 (17) of the Indian Section 2 (18) of the Indian


Contract Act, 1872 Contract Act, 1872

Purpose to Yes No
deceive the other
party

Variation in In a fraud, the party making In misrepresentation, the party


extent of truth the representation knows making the representation
that the statement is not believes the statement made by
true. him is true, which
subsequently turned out as
false.

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

Voidable The contract is voidable The contract is not voidable if


even if the truth can be the truth can be discovered in
discovered in normal normal diligence.
diligence.

Click on video to unmute

De nition of Fraud
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12/8/2017 Difference Between Fraud and Misrepresentation (with Examples and Comparison Chart) - Key Differences

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.

De nition 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.

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12/8/2017 Difference Between Fraud and Misrepresentation (with Examples and Comparison Chart) - Key Differences

Key Di erences 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.

Conclusion
The acts done fraudulently are civil wrong and hence the party doing it can be sued
in court by the aggrieved party even if the aggrieved party has a means of
discovering the truth in the normal course of action. Misrepresentation is not a
civil wrong as the party making the wrong representation honestly have no idea
about the actual truth and so the aggrieved party cannot sue the other party in
court but it has the option to rescind the contract.

Hence, there is an absence of free consent in both the conditions whether it is fraud
or misrepresentation that is why the contract is voidable at the option of the party
whose consent was so caused.

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12/8/2017 Difference Between Fraud and Misrepresentation (with Examples and Comparison Chart) - Key Differences

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Filed Under: Law

Comments

Ibrahim khan says


November 19, 2015 at 8:01 pm

Thank-you for clarification


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12/8/2017 Difference Between Fraud and Misrepresentation (with Examples and Comparison Chart) - Key Differences

Reply

Arushi says
March 24, 2017 at 3:57 am

This study matter helped me so much. Thank you so much to whosoever


uploaded this!

Reply

Atul says
September 29, 2017 at 10:47 pm

This clarification is very lucid. Thanks.

Reply

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