A representation is a statement or assertion, made by one party to another, before or at the time of the contract, of some matter or circumstances relating to it.
A representation is a statement of some material facts made by one party in the course of negotiation with a view to induce the other party to enter into a contract. Such representation may either (f) form a term of the contract or (ii) may, without acttlally forming a term of the contract, be the inducing cause of the contract. Representation which do not fall under any of these categories are of no legal consequence. The first class of cases are considered by sections 11-17 of Sale of Goods Act and second class of cases are considered by sections 16 and 17 of the Contract Act. Representation may be in writing, verbally or implied by the conduct of the parties.
A representation when made untruly or wrongly is called misrepresentation. An untrue misrepresentation may be either (a) innocent (i.e. unintentional), or (b) wilful (i.e. intentional or deliberate). The former is called Misrepresentation and the latter Fraud.
INNOCENT MISREPRESENTATION Misrepresentation defined-Section 18
Misrepresentation is a false statement which the person making it honestly believed to be true, or which he does not knew to be false. Non-disclosure of material facts without any intention to deceive the other party is also misrepresentation. So misrepresentation is a misstatement made innocentiy and with an honest belief as to its truth.
According to section 18 misrepresentation includes.:
1. Positive assertion:
When a person makes a definite statement of facts about a contract without having any reasonable justification for believing the same to be true, though it is not true, there is misrepresentation. Misrepresentation must be of facts essential to the contract. Mere expression of opinion is net misrepresentation
2. Breach of duty:
Any breach of duty by a person which brings an advantage to the person committing it bv misleading another to his prejudice.
If the misrepresentation is true when made: but to the knowledge of the party making it, becomes untrue before the contract is made, it must be informed to the other party. Failure to correct would amount to misrepresentation.
3. Mistake about subject-matter:
Causing, however innocently, a party to use agreement to make a mistake as to the substance of the thing which is the subject of the agreement.
Essential requirement of misrepresentation
Misrepresentation must satisfy the following requirements:
1. Misrepresentation must relate to a material fact.
2. it must be made innocently believing it to be true.
3. It must be made before conclusion of the contract.
4. It must induce the ether party to enter into a contract.
5. It must actually have been acted upon.
6. It must be untrue.
7. It need not be made direcfiy.
Effect of misrepresentation
An aggrieved party is entitled to the following remedies:
1. avoid or rescind the contract.
2. accept the contract but insist that be shourd be restored to its position if the misrepresentation were true.
Loss of right of restoration:
The aggrieved pady loses the above rigtht if
1. If consent was given with the knowledge of misrepresentation.
2. Restoration of the parties to the original position is not possible either because the subject-matter of the contract had been consumed or destroyed or the contract cannot be rescinded wholly.
3. Third party has acquired rights in the subject matter of the contract in good faith and for value.