presentation on misrepresentation and fraud

1. Welcome…

2. Misrepresentation and fraud
Presented by :Nishna Sathyan,K.M

3. Fraud…
• Comes under section 17 and 18 of Indian Contract Act

4. Defining fraud…
• Section 17 defines fraud as
• "Fraud" means and includes any of the following acts
committed by a party to a contract, or with his
connivance,
or by his agent, with intend to deceive another party
thereto of his agent, or to induce him to enter into the
contract:-

5. The acts…
• Sub Section (1) the suggestion, as a fact, of that which is
not true, by one who does not believe it to be true
• Sub Section (2) the active concealment of a fact by one
having knowledge or belief of the fact
• Sub Section (3) a promise made without any intention of
performing it
• Sub Section (4) any other act fitted to deceive
• Sub Section (5) any such act or omission as the law
specially declares to be fraudulent

6. Requisites of fraud…
• A representation or assertion, and it must be false
• The representation must be of fact
• The representation made with the knowledge of falsity or recklessly
• The representation made with the intension of inducing party
deceived to act upon it
• The representation must be in fact deceive
• The party subjected to fraud must have suffered some losses

7. Sometimes silence is also fraud…

8. “ It was like riding a tiger, not knowing how
to get off without being eaten”

9. Remedies…
• Can avoid performance of contract
• He can insist contract shall be performed and that shall
put in position in which he would have been if the
representation made been true

10. • Normally claim given for damages
Exceptional cases
• When party have means to discover the truth
with ordinary diligence
• After becoming aware of fraud still takes benefit
under the contract
Restitution for fraud…

11. Misrepresentation
• Comes under Section 18 and 19 of Contract Act

12. Representation…
• A statement of fact made by one party to the
contract to the other which induces the other to
enter into the contract

13. Misrepresentation
• Incorrect or false statement
• Made not to deceive or defraud
• It is innocent
• Party making it believes it to be true

14. Consequences of misrepresentation
• Avoid performance of contract
• He can insist contract shall be performed and that
shall put in position in which he would have been
if the representation made been true

15. Restitution for misrepresentation...
• Normally no claim given for damages
Exceptional cases
Misrepresentation made on prospectus of company
Agent who commit breach of warranty of authority
Negligent representation

16. Distinguishing Fraud & misrepresentation
Fraud
• Intentional
• Can claim for damage
• Contract can be avoided
Misrepresentation
• Innocent
• No claim for damages
• Contract can not be
avoided in all cases

17. Conclusion…
• Fraud is an intentional act & misrepresentation is an
innocent act…anyway always try to keep your contract
away from both…

18. References…
• Gulshan, S.P (2000) “Business law". New age international
Ltd, New Delhi.
• Shukla, M.C(1999) “A Manual Of Mercantile Law”. S.Chand
& company Ltd, New Delhi.

19. One last thing…