Misrepresentation

In one line

Misrepresentation is an untrue statement made honestly: the speaker believed it, and it was still wrong, and it still drew the other party into the contract.

In the words a student can write in an exam: section 18 of the Indian Contract Act 1872 provides that "'Misrepresentation' means and includes" three things: 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; any breach of duty which, without an intent to deceive, gains an advantage to the person committing it by misleading another to his prejudice; and causing, however innocently, a party to an agreement to make a mistake as to the substance of the thing which is the subject of the agreement.

Why the law has this at all

If the law dealt only with fraud, a party who was misled would have to prove dishonesty, and dishonesty is hard to prove and often absent. People repeat what they were told. A dealer passes on the previous owner's word about the mileage. A seller describes land by the area written in an old document.

In each case the speaker is honest and the listener is still misled, and the listener's position is exactly the same as if he had been lied to: he has bought something other than what he was promised.

So the Act gives relief without requiring dishonesty, but it gives less relief. The contract can be undone, because it should never have been made on those terms. Damages are not given, because the speaker did no wrong beyond being mistaken. That is the whole architecture of section 18, and it explains every difference from section 17.

The provision itself

"'Misrepresentation' means and includes

(1) 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 to the person committing it, or any one claiming under him, by misleading another to his prejudice, or to the prejudice of any one claiming under him;

(3) causing, however innocently, a party to an agreement, to make a mistake as to the substance of the thing which is the subject of the agreement."

Broken down: the three limbs

Limb one: an unwarranted positive assertion

Four elements.

1. A positive assertion, that is a definite statement of fact, not an expression of opinion and not a vague commendation.
2. Of something not true.
3. In a manner not warranted by the information of the person making it. This is the heart of the limb and it is regularly missed. The speaker must have asserted more confidently than his information justified. A person who has heard something at second hand, and states it flatly as a fact of his own knowledge, is within the clause even though he believes it.
4. Though he believes it to be true. Belief is what keeps it out of section 17.