Distinguish between Fraud and Misrepresentation

Distinguish 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.

Difference between fraud and misinterpretation: ‘Fraud’ means a willful misrepresentation of a material fact while ‘Misrepresentation’ means a bonafide representation which is false. 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 Indian penal code and hence not punishable. Fraud, in certain cases, is a punishable offense under 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.

Share This Post