‘CONSENT’ DEFINED
Two or more persons are said to consent when they agree upon the same thing in the same sense.
FREE CONSENT : Consent is said to be free when it is not caused by:
1. COERCION (SECTION 15)
2. UNDUE INFLUENCE (SECTION 16)
3. FRAUD (SECTION 17)
4. MISREPRESENTATION (SECTION 18)
5. MISTAKE (SUBJECT TO PROVISION OF SECTION 20, 21 & 22)
FREE CONSENT SECTION (14)
When there is no consent, there is no contract. It is one of essentials of a valid contract. Parties to the contract should enter into the contract with free consent. Free consent is mentioned in sec-14. If the consent of one of parties is not free, it is no contract. If one of the above stated factors causes consent, the contract is not a valid contract. If consent in an agreement is caused by
(a) coercion or
(b)undue influence or
(c)fraud or
(d)misrepresentation,
The agreement is a contract voidable at the option of party whose consent was so caused. If the consent is caused by mistake, the contract is void.
MISREPRESENTATION (SECTION 18)
The general meaning of misrepresentation is an untrue statement of material fact that is made by one party to the other party which leads the other party’s decision in corresponding to the contract. To understand the concept of misrepresentation, the Misrepresentation Act, 1967 will help us.
Misrepresentation meaning in law can be stated as “Misrepresentation is a false statement of a material fact by one party to the other in the contract, whereas due to such false statement the effect’s the other party’s decision concerning the contract.”
Misrepresentation is explained by SECTION 18 (A) of ICA 1872. When a false statement is made with the knowledge that it is false and real intention is to deceive other party to make him agree to enter into a contract, this act amounts to fraud. However, when a person makes a false statement actually believes it to be true and he has no intention to mislead the other party to contract is known as misrepresentation. Where the consent of party is caused by misrepresentation, an agreement is a contract voidable at the option of party whose consent so caused.
DEFINITION OF MISREPRESENTATION IN CONTRACT LAW
As per SECTION 18 of contract law, MISREPRESENTATION means and includes;
- The positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believed it to be true,
- Any breach of duty which, without ab 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 any one claiming under him.
- Causing, however innocently, a party to an agreement, to make a mistake as to the substance of the thing which is the subject of the agreement.
As per the misrepresentation definition, we can say that misrepresentation is a form of a statement made preceding the contract being completed. Therefore, there are two varieties of statements that can be performed before the contract is formed, these are;
- Form part of a contract.
- Not form part of a contract.
TYPES OF MISREPRESENTATION
- Fraudulent Misrepresentation
- Negligent Misrepresentation
- Innocent Misrepresentation
FRAUDULENT MISREPRESENTATION
When a false representation is made with intention of a person then the fraudulent misrepresentation will happen.
In fraudulent misrepresentation, the person knows very well that the other party has no actual knowledge or less knowledge and with the intention, the person takes advantage of it and makes false statements to enter and form a contract. This amounts to fraudulent misrepresentation in the law of contracts.
EXAMPLE: A made an offer to sell his bike to B for Rs. 50,000/- and B agrees. A stated that the bike is in good condition. But in actuality, the bike has some internal damages that could not be seen easily. But, B has less knowledge about bikes and their part and he believes upon A that the condition of the bike is good.
So, this is an example of fraudulent misrepresentation, and such contracts are voidable at the option of the victim party.
NEGLIGENT MISREPRESENTATION
Negligent misrepresentation is a statement made by a party to another negligently or without any reasonable ground for believing it to be true. Negligent misrepresentation is made carelessly or without any reasonable grounds for believing it to be true.
Here, the party has no intention to make fraud but due to carelessness or negligence, the negligent misrepresentation will happen.
Negligent misrepresentation is defined in the case of DERRY V/S PEEK, 1889 as a false statement that is made without knowingly or carelessly or recklessly whether having knowledge of it to be true or false.
INNOCENT MISREPRESENTATION
The term ‘Innocent Misrepresentation’ can be defined as ‘it is used for the misrepresentation without any negligence or fraud or misrepresentation in which the representee has good faith.
The remedy for innocent misrepresentation is the rescission of the contract.
DAMAGES FOR MISREPRESENTATION
In fraudulent misrepresentation, the damages are recoverable under Common law. Whereas it is also recoverable under negligent misrepresentation. But, no damages will be provided under the innocent misrepresentation as the remedy for innocent misrepresentation is the rescission of the contract.
DIFFERENCE BETWEEN FRAUD & MISREPRESENTATION
