Page 20 - 01. Indian Contract Act, 1872

 In all of the above stated contracts, a person has to disclose all the material

information.

(iv) Misrepresentation:

 Where a person asserts something which is not true, through he believes it to
be true his assertion amounts to misrepresentation.

 Misrepresentation made by a person may be either

1. innocent, or
2. without any reasonable ground

 The aggrieved party can avoid the contract, but cannot sue for damages in
normal circumstances:

 Its damages can be obtained in following cases:

(i) from a director or promoter making innocent misrepresentation in
company‟s prospectus.

(ii) from an agent committing breach of warranty of authority
(iii) from a person who has made a certain statement in the court, relying

upon which a party has suffered damages is stopped by the court from

denying it.
(iv) negligent representation made by one person to another between whom

there exits a confidential relationship.

Differences between fraud and misrepresentation

Fraud Misrepresentation
1 It is made intentionally with view It is made innocently

to deceive

2 The person making the wrong The person making the wrong
statement does not believes it statement believes it to be true

to be true

3. The aggrieved party can The aggrieved party can rescind the

rescind the contract and can contract but cannot claim damages

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