Preface
Misrepresentation is a false statement that the person making it honestly believed to be true, or that he does not know to be false.
Relevant Provisions
Sections 18 and 19 of the Contract Act, of 1872 deal with misrepresentation.
Definition
Misrepresentation is to say a misleading statement to someone. However, Section 18 of the Contract Act defines misrepresentation as follows
1. Any breach of duty which, without an intent to deceive, gains an advantage to the person committing it, or anyone claiming under him, by misleading another to his prejudice or to the prejudice of anyone claiming under him.
2. To cause, no matter innocently, a party to an agreement to make a mistake as to the substance of the thing which is the subject of the agreement.
Ingredients of Misrepresentation
The ingredients of misrepresentation are the following.
i) Positive and Unwarranted Assertion U/s 18(1)
Positive Assertion means to declare or announce aggressively or positively without any obvious need for proof or evidence.
Unwarranted Assertion means anything which is not confirmed or guaranteed. So to constitute misrepresentation such information has to be given which is although very aggressively or positively told to someone.
ii) Breach of Duty U/s 18(2)
Any breach of duty which brings an advantage to the person committing it by misleading the other to his prejudice is a misrepresentation.
iii) Causing To make a Mistake
Let’s have an overview of this concept briefly:
a) Mistake as to the Subject Matter
If one of the parties to a contract is under any kind of mistake regarding the subject matter of the agreement especially if it is caused by the other party, even though innocently it would amount to misrepresentation.
b) Innocent Misrepresentation U/s 18(3)
If the misrepresentation was caused innocently it can make the contract voidable. At this stage, the defendant would not be able to use the innocence factor as a defense. It is because the other party had suffered at the expense of these people’s innocent mistake of representation.
iv) To hide Vital Facts
Suppression of vital facts also constitutes misrepresentation. Suppression of vital facts may be done through the following
-
- Breach of duty (Subsection 2)
- Leading another party to make a mistake regarding the subject matter (Subsection 3)
Condition for Misrepresentation
It is compulsory that to constitute misrepresentation, a false representation should be regarding the material facts.
For example: In a sale of land the seller makes a general statement that the land is fertile and improvable whereas a few parts of the land have been abandoned as useless, it would not constitute misrepresentation.
Effect of Misrepresentation on Agreement
According to Section 19 of the Contract Act, of 1872
When the consent of an agreement is caused by coercion, fraud, or misrepresentation, the agreement is voidable at the option of the aggrieved party. However, in case of misrepresentation, the agreement is voidable at the option of the party who is aggrieved by such a promise.
Performance of the Contract
If the aggrieved party thinks fit, he may insist on the performance of the contract
Exception:
The contract is not voidable at the option of the aggrieved party if he had the means to discover the truth for himself with ordinary diligence.
Onus of Proof
The burden of proof lies, on the party seeking to avoid the contract on the ground of misrepresentation.
Final Note
Misrepresentation is the breach of duty which, without an intent to deceive, gains an advantage to the person committing it, or anyone claiming under him, by misleading another to his prejudice or to the prejudice of anyone claiming under him.
REFERENCES
- The Contract Act, 1872
- N-Series by M.A. Chaudhary
- Law of Contract by Avtar Singh
