Difference Between Fraud and Misrepresentation

The main difference between fraud and misrepresentation is that fraud happens when a person or a party intentionally and willfully represents false information to deceive another party. In contrast, misrepresentation happens when a person or a party unintentionally represents false information to another party.

This article will cover the difference between fraud and misrepresentation in great detail. But, before we do that, let’s quickly go over the topics listed under the table of contents (TOC) we will cover in this blog.

Table of contents (TOC)

• Difference between fraud and misrepresentation
• What is fraud?
• What is misrepresentation?
• Key differences between fraud and misrepresentation
• Conclusion

Difference Between Fraud and Misrepresentation

For better understanding, let’s explore the fraud and misrepresentation difference in the tabular format:

What is fraud? 

Fraud definition: Fraud can be defined as the deliberate and willful representation of false information to deceive the other party and make them enter into a contract.

Fraud occurs when one person actively conceals a fact or set of facts from another party while knowing those facts to be true and existing. To prove fraud, you must show that there was an intentional act to cause harm. Let’s go through an example to understand the term “fraud” in a better way.

Fraud example: Ankit buys goods worth Rs. 3000 from Anuj, a shopkeeper. Ankit informs Anuj that he will shortly pay the amount of the goods, as he cannot do so because of some financial difficulties. Anuj believes it and allows Ankit to purchase the goods on credit. Ankit, on the other hand, has no intention of repaying Anuj. This type of activity is then considered fraud.

Forge Your Future: Discover Valuable Courses for Post-12th and Free Online Courses Today!

What is misrepresentation? 

Misrepresentation definition: Misrepresentation can be defined as an unintentional act of providing false information to the other party.

Misrepresentation happens when a party who believes a fact or information to be true conveys the same information to another party without ulterior motives. The other party relies on the statement or information and enters the contract. But, later, it was found that the passed-on or conveyed information was false.

It is important to remember that in misrepresentation, both parties are unaware that the information is false and enter into a contract assuming it is true. Let’s go through an example to understand the term “misrepresentation” in a better way.

Misrepresentation example: Ankit offers a deal to Anuj, and the deal is to purchase his car, which is in excellent condition. After thinking for a while, Anuj purchases it in good faith. But after several days, the car started to malfunction, and because of this, Anuj had to pay for the car repair cost. So, this act will amount to misrepresentation as Ankit believed that the car worked properly and was unaware of any defects in his car. But, he was wrong, and the information he provided to Anuj was false that his car was in excellent condition.

Key differences between fraud and misrepresentation

Some of the key differences between fraud and misrepresentation are:

• The Indian Contract Act of 1872 defines fraud in Section 17 and misrepresentation in Section 18.
• The purpose of misrepresentation is not to deceive the other party, whereas the purpose of fraud is to deceive the other party.
• In the event of fraud, the harmed party may sue for damages. In the case of misrepresentation, however, the harmed party cannot sue for damages.
• In fraud, the party making the representation is aware of the truth, but in misrepresentation, the party is unaware of the truth.
• Fraud can be defined as the deliberate and willful representation of false information to deceive the other party and make them enter into a contract. Whereas misrepresentation can be defined as an unintentional act of providing false information.

Conclusion

The primary distinction between fraud and misrepresentation is the intent of the party. In fraud, the party makes a false statement to deceive the other contracting party. In misrepresentation, the party makes a false statement believing it is true with no intention of deceiving the other contracting party.

Related Reads: