A misrepresentation is a misleading statement of a material fact made by one party which has an impact on the other party judgment concerning a contract. If the misrepresentation is established, the contract can be declared void and depending on the circumstances, the affected party may seek damages. In such a contract dispute, the aggrieved party is the plaintiff, and the party who made the misrepresentation becomes the defendant.
In contract law, misrepresentation is chiefly important in business dealings where enormous transactions take place with high frequency. Misrepresentation of risk or value is correlated with an agreement that can cause huge financial losses to individuals and businesses while growing the risk of collaborative business ventures. Therefore, misrepresentation contract law is vital in ensuring fairness and decreasing the risk of entering into agreements between businesses and individuals.
A representation is said to be such a statement that causes the entry into a contract but is not a part of a term of the contract. Misrepresentation is about providing incorrect information by one party to the other party before the contract is made which influences them to make the contract. If an individual makes a contract in reliance on misrepresentation and has to suffer loss as a result, they can claim damages or revoke the contract.
The Indian Contract Act, 1872 under Section 18 defines “misrepresentation which states, a misrepresentation is a form of a statement made preceding to the contract being completed". There are two varieties of statement that can be performed before a contract is formed, these will either:
When a statement that is made without any reasonable basis is unwarranted. When anyone makes a constructive statement of a fact without any reliable source of information and believes that statement to be true, the act amounts to misrepresentation.
There are three types of misrepresentation which the following as under:
These are remedies for misrepresentation which are as under: