Difference between Fraud and Misrepresentation

373 votes

‘Fraud‘ means a willful misrepresentation of a material fact while ‘Misrepresentation‘ means a bonafide representation that is false. The former is an untrue statement given by one party that induces another party to enter into the contract, whereas the latter is the statement of fact, made by one party, believing that it is true, then this is an 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 entitle the aggrieved 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 another party for damages. Go through, the article presented to you, to know some more differences between these two.
 

What is Fraud?

A false representation willfully made by a party to a contract in order to mislead the other party and inducing him to enter into the contract is known as fraud.
 
The party making the 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 action amounts to Fraud.
 

What is 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 for 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.
 

What is the difference between Fraud and Misrepresentation?

The basic difference between misrepresentation and fraud is that in fraud the person making the representation does not himself believe in the truth of the statement he is making whereas in situations of innocent misrepresentation the person making the statement may believe that what he is saying is true. This is due to the fact that the person making the statement is simply repeating what another person has asserted to be true. In cases of fraud, the person making the statement is a complete liar and is making the statement to deceive others to enter into a contract. However, this is just the general rule.
 
In misrepresentation, the person making the false statement believes it to be true. In fraud, a false statement is a person who knows that it is false or he does not care to know whether it is true or false.
 
A deceptive act done intentionally by one party in order to influence the other party to enter into the contract is known as Fraud. The representation of a misstatement, made innocently, which persuades other parties to enter into the contract, is known as misrepresentation.
 
There is no intention to deceive the other party when there a misrepresentation of fact. The very purpose of the fraud is to deceive the other party to the contract.
 
Misrepresentation renders the contract voidable at the option of the party whose consent was obtained by misrepresentation. In the case of fraud, the contract is voidable, it also gives rise to independent action in tort for damages.
 
Misrepresentation is not an offense under the Indian penal code and hence not punishable. Fraud, in certain cases, is a punishable offense under the Indian penal code.
 
Generally, silence is not fraud except where there is a duty to speak or the relations between parties is fiduciary. Under no circumstances can silence be considered as misrepresentation.
 
The party complaining of misrepresentation can’t avoid the contract if he had the means to discover the truth with ordinary diligence. But in the case of fraud, the party making a false statement cannot say that the other party had the means to discover the truth with ordinary diligence.

LawRato LawRato

742 votes

You have asked what is the difference between fraud and Mr presentation if someone facing the allegation of fraud generally FII are is registered in section 467 468 and 470 1IPC and if there is a misrepresentation or like someone has given you money and you are holding that money without citing any valid reason It attracts 406 that is, breach of trust you have asked question like that you are you doing some research on legal issues if you want to further or please send your question in detail

Advocate Dev Yati LawRato

637 votes

Dear Client
A misrepresentation is a false statement of a material fact made by one party which affects the other party's decision in agreeing to a contract. If the misrepresentation is discovered, the contract can be declared void and depending on the situation, the adversely impacted party may seek damages.

Fraud implies and involves any of the following acts committed by a contracting party or his connivance or his agent with the intention of deceiving or inciting another party or his agent to enter into the agreement.

The suggestion, as a fact, of that which is not true by one who does not believe it to be true.
The active concealment of a fact by one having knowledge or belief of the fact.
A promise made without any intention of performing it.
Any other act fitted to deceive.
Any such act or omission as the law specially declares to be fraudulent.

Advocate Diksha Bhaskar LawRato

434 votes

Intent is the primary difference between fraud and misrepresentation. Fraud occurs when a party lies to the other party in order to trick them. Misrepresentation is when a party falsely represents something, believing that it's true without the intention to deceive the other party.

Advocate Chikirsha Mohanty LawRato