Comparison Chart

BASIS FOR
FRAUD MISREPRESENTATION
COMPARISON
Meaning A deceptive act done The representation of a misstatement,
intentionally by one party made innocently, which persuades
in order to influence the other party to enter into the contract,
other party to enter into the is known as misrepresen2tation.
contract is known as
Fraud.
Defined in Section 2 (17) of the Section 2 (18) of the Indian Contract
Indian Contract Act, 1872 Act, 1872
Purpose to deceive Yes No
the other party
Variation in extent In a fraud, the party In misrepresentation, the party
of truth making the representation making the representation believes the
knows that the statement is statement made by him is true, which
not true. subsequently turned out as false.
/Claim The aggrieved party, has The aggrieved party has no right to
the right to claim for sue the other party for damages.
damages.
Voidable The contract is voidable The contract is not voidable if the
even if the truth can be truth can be discovered in normal
discovered in normal diligence.
diligence.

Key Differences Between Fraud and Misrepresentation

The major difference between fraud and misrepresentation are as under:

1. Fraud is a deliberate misstatement of a material fact. Misrepresentation is

a bonafide representation of misstatement believing it to be true which
turns out to be untrue.
2. Fraud is done to deceive the other party, but Misrepresentation is not
done to deceive the other party.
 3. Fraud is defined in Section 17 and misrepresentation is defined in Section
18 of the Indian Contract Act, 1872.
4. In fraud, the party making representation knows the truth however in
misrepresentation, the party making representation does not know the
truth.
5. In fraud, the aggrieved party can claim damages for any loss sustained.
On the other hand, in misrepresentation, the aggrieved party cannot claim
damages for any loss sustained.

Fraud- These actions include:

 Presenting as true something that is known not to be true.

 Actively hiding a fact when one has knowledge or belief of its existence.
 Making a promise without any intention of fulfilling it.
 Engaging in any other deceptive act.
 Committing any act or omission that the law specifically declares as
fraudulent.

Section 17(1) of the law defines the elements of Fraud in the Contract Law as follows:

 There must be a suggestion made regarding a fact.

 The fact suggested must be untrue.
 The suggestion must come from someone who does not believe it to be true.
 The suggestion must be made to deceive or induce the other party to enter
the contract.