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Assignment On Section 18 "Misrepresentation" The Indian Contract Act, 1872

Misrepresentation occurs when a false statement is made without intent to deceive. It defines positive assertions not warranted by information, breaches of duty gaining advantage by misleading others, and causing mistakes as to the substance of an agreement, even if innocently. Case law establishes misrepresentation for statements of intent with no intent to fulfill, and statements of fact that are untrue, like a property's tenant status. It differs from fraud in lacking intent to deceive and knowledge of falsity.

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302 views

Assignment On Section 18 "Misrepresentation" The Indian Contract Act, 1872

Misrepresentation occurs when a false statement is made without intent to deceive. It defines positive assertions not warranted by information, breaches of duty gaining advantage by misleading others, and causing mistakes as to the substance of an agreement, even if innocently. Case law establishes misrepresentation for statements of intent with no intent to fulfill, and statements of fact that are untrue, like a property's tenant status. It differs from fraud in lacking intent to deceive and knowledge of falsity.

Uploaded by

DeepakGupta
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Assignment on

Section 18
“Misrepresentation”
The Indian Contract Act, 1872

Presented by:
Devesh Kumar
Section - C
Roll no. : 5244
BA.LLB.(hons.) 1st year

Presented To:
Prof. Dr. Anupam Acharya
INTRODUCTION:

In our day to day life we all are doing many contacts


some are at a minor level small scale and some are at a
large scale for those contacts which have
important value in life.
Like:- bet on whether to allow application in cell
phone and computer, etc. , by accepting terms and
condition of any software, or any application form,
etc.

What is a contract?

According to section 2 (h) Indian contract act, 1872


Contract is an agreement which is enforceable by
law.
Section 18 “ misrepresentation”
Section 18 Misrepresentation of Indian contract act
1872 define about those wrong-doer which are not
intentionally, they done in a misunderstanding it
means a person is promise something to another
person which is false but the promise things that it is
true and fact.

For example: Illustration


A is the manager of a marriage burro, B was
an old person who is finding a groom for
her daughter C, manager was tells about
all groom to A having a good personality
and earning, reputed, good earning, good
looking, etc. Then A convenes her daughter
to marry this that boy. On the day of
marriage the father and her daughter
seems that the groom was not according to
the promise made by the manager, he was
an 60 years old man So here the promise
made from the manager was an fraud for B
and the performance by B to her daughter
was misrepresentation, because his
intention was not to deceive his daughter.
DEFINITION and MEANING:
Meaning: When a person making a false
statement is made by a person to other
party without any intention to deceive
them without any knowledge of the
statement that is may be false.

Definition: Sec 18 defines


1. If a person is making a false
statement without any intention to
deceive the other party, though that
person also believes to be true about
that statement who makes it.
2. If a person is breach of his legal
duty without an intent to deceive for
just gains an advantage.
3. If a mistake was caused with the
subject of the contract innocently it
amount to be misrepresentation.

Definition by Experts:
In Cheshire, Fifoot & Furmston's Law of
Contract, the term is described as:
"A representation is a statement of fact
made by one party to
the contract(the representor) to the
other (the representee) which, while not
forming a term of the contract, is yet one
of the reasons that induces the
representee to enter into the contract. A
misrepresentation is simply a
representation that is untrue."

Halsbury's Laws of of contract says


"A misrepresentation is a positive statement of
fact, which is made or adopted by a party to
a contractand is untrue.
Statutory definition:
Sec 18 of Indian contract act, 1872
“ misrepresentation” defines-
The positive assertion, in a
manner not warranted by the
information of the person making
it, of that which is not true, though
he believes it to be true;
2. Any breach of duty which,
without an intent to deceive, gains
an advantage of the person
committing it or any one claiming
under him, by misleading another
to his prejudice or to prejudice of
any one claiming under him;
3. causing, however in innocently,
a party to an agreement, to make
a mistake as to the substance of the
thing which is the subject of the
agreement.
Definition in working:
According to section 18
misrepresentation of Indian contract
act 1872
A person innocent that if he would
make false statement without an
intention to deceive anyone and
though he also believe it to be true who
makes it.
there is misrepresentation, in Derry v/s
Peek (1889) 14 A.C. 337 the directors
of a company stated in the prospectus
of the company that they had been
authorised to run tramways with
steam power. Sanction from the board
of trade had yet to be obtained but the
director honestly believed that the
same would be obtained as matter of
course. The board of trade refused to
grant the permission for the use of
steam power in an action by a
shareholder against the directors for
fraud, it was held that there was a mere
misrepresentation but no fraud as the
statement had been made without an
intention to deceive.

RELEVANCE of misrepresentation:
The most relating thing for
misrepresentation is section 17 of
Indian contract act, 1872 which is
fraud. Both in the fraud and
misrepresentation statement is false
but the difference between fraud and
misrepresentation are:
• In fraud the statement was false is
in the knowledge of that person
who makes it but in
misrepresentation, the statement
is false is not in the knowledge of
the person who makes it
• A false statement makes without
any intention to deceive the other
party in misrepresentation but in
the fraud the false statement is
made with the intention to deceive
the other party.

CRITICISM:
A misrepresentation is an untrue
statement made during negotiations.
During a contract dispute, the untrue facts
may or may not pertain to important
details. If they refer to a crucial piece of
information, the lies or untruths are, of
course, more important.
Misrepresentation can be further broken
into innocent, fraudulent, or negligent
forms. Negligent would mean that the
information was distorted through an
assumption or without finding out all of
the facts.
Fraudulent would refer to lies or untrue
facts made on purpose or with the intent
to deceive. Innocent misrepresentation
could include something as simple as a
clerk's error or a simple
misunderstanding.
The criticism of misrepresentation is seen
in the case of Noorudeen Vs Umairathu
Beevi A.I.R 1998 Let. 171 where the
transaction was set aside on the ground of
fraud and misrepresentation.
The defendant, who was plaintiff’s son got
a document executed from the plaintiff
describing it as hypothecation deed of
plaintiff’s property. The plant if was a blind
man at the sale was for an inadequate
consideration. The position of the property
was also not given to the defendant. It was
held that such a deed which was got
executed by fraud and misrepresentation,
was rightly aside.
CONCEPT:
the concept of misrepresentation is defined by
some case laws -
Edgington v Fitzmaurice
The plaintiff shareholder received a circular
issued by the directors requesting loans to
the amount of £25,000 with interest. The
circular stated that the company had bought
a lease of a valuable property. Money was
needed for alterations of and additions to the
property and to transport fish from the coast
for sale in London. The circular was
challenged as being misleading in certain
respects. It was alleged, inter alia, that it was
framed in such a way as to lead to the belief
that the debentures would be a charge on the
property of the company, and that the whole
object of the issue was to pay off pressing
liabilities of the company, not to complete the
alterations, etc. The plaintiff who had taken
debentures, claimed repayment of his money
on the ground that it had been obtained from
him by fraudulent mis-statements.
The Court of Appeal held that the statement
of intention was a statement of fact and
amounted to a misrepresentation and that
the plaintiff was entitled to rescind the
contract. Although the statement was a
promise of intent the court held that the
defendants had no intention of keeping to
such intent at the time they made the
statement.
Smith v Land & House Property
Corporation
The plaintiff put up his hotel for sale stating
that it was let to a ‘most desirable tenant’. The
defendants agreed to buy the hotel. The
tenant was bankrupt. As a result, the
defendants refused to complete the contract
and were sued by the plaintiff for specific
performance. The Court of Appeal held that
the plaintiff’s statement was not mere
opinion, but was one of fact.

Royscott Trust Ltd v Rogerson


A car dealer induced a finance company to
enter into a hire-purchase agreement by
mistakenly misrepresenting the amount of
the deposit paid by the customer, who later
defaulted and sold the car to a third party.
The finance company sued the car dealer for
innocent misrepresentation and claimed
damages under s2(1).
The Court of Appeal held that the dealer was
liable to the finance company under s2(1) for
the balance due under the agreement plus
interest on the ground that the plain words of
the subsection required the court to apply the
deceit rule. Under this rule the dealer was
liable for all the losses suffered by the finance
company even if those losses were
unforeseeable, provided that they were not
otherwise too remote. It was in any event a
foreseeable event that a customer buying a
car on HP might dishonestly sell the car.

CONCLUSION:
• A false statement makes without any
intention to deceive anyone is amount
to be misrepresentation.
• Misrepresentation is a false statement
which makes without any intention to
deceive the other party, and that
statement is not in the knowledge of
that person who makes it that it is false
or true.
• The main difference between fraud
and misrepresentation is the intention
of deceive and the knowledge of the
statement is true or false.
• Criticism of misrepresentation is that
the false statement is also count in
fraudulent misrepresentation and
negligence.
• There are many leading cases which
helps to exercise the
misrepresentation.

SUGGESTIONS:
Through my research and study
about misrepresentation I suggest
to all the readers to that to they can
understand the difference between
fraud and misrepresentation and to
ensure that they can does a proper
distinguish between the innocent,
fraudulent and negligence
misrepresentation and punish only
those accused who are stand in the
circumstances of a punishable
misrepresentation.

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