Parameter Fraud Misrepresentat
Deliberate and willful representation of Unintentional act of providi
What is it?
information to deceive the other party. information to the other par
How many parties get
Only one Both the parties
deceived?
Can a victim sue for damages Yes No
Which Section of the Indian
Section 17 Section 18
Contract Act defines it?
Is it punishable under the
Yes No
Indian Penal Code
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.
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.
