Difference between Fraud and Misrepresentation

As written in the note, Fraud operates whenever a person causes another to act on a false representation that he himself does not believe to be true under section 17 Contract Act. As for Misrepresentation, it said that is a false statement made by one party which induces the other to enter into a contract, but the person who made such presentation thought it was true under section 18 Contract Act. There are few types of fraud such as insurance fraud, welfare fraud, election fraud and so on. Misrepresentation included innocent misrepresentation, negligent misrepresentation and fraudulent misrepresentation. What is the difference between fraud and misrepresentation?

According to Bench & Bar, it said that the difference between fraud and misrepresentation is that not all misrepresentation is fraud, but almost all fraud involves misrepresentation. Fraud is always done intentionally whereas misrepresentation can be done intentionally or negligently. Based on Wikipedia.com, it said that fraud always have malicious intent; misrepresentation may not have malicious intent to deceive if it happens negligently through a misstatement and/or omission to have material act(s).

One of the example for fraud: If the plaintiff wishes the buy a house from the defendant, the defendant know that the house is infested with termites. But the defendant's actual representation that the house is free from termites coupled with the plaintiff's reliance upon that representation might support a subsequent action by the plaintiff for fraud. In this case, the defendant is making fraud as he has the intention to hide the actual facts from the plaintiff about the termites. Therefore, the plaintiff can sue the defendant under section 17 Contract Act.

Another example for silent fraud: A defendant is selling a car to the plaintiff where the defendant knows that the odometer had been rolled back. The defendant knows that most of the people will rely on the odometer to decide whether to purchase the car or not. Therefore, the defendant did not tell the plaintiff about the odometer is not accurate. It is likely that the defendant's silent under these circumstances would support a subsequent action for silent fraud. Silent fraud can be occur when defendant failed to disclose material facts. From the example above, it shows that the defendant is hiding some information from the plaintiff. The defendant assume that since the plaintiff didn't ask the defendant about the odometer, then the defendant can just ignore it and continue hide it from the plaintiff. To prove that the defendant is against the law of Contract Act, the plaintiff has get some convincing evidence such as

-the defendant has actual knowledge about the fact(s)

-the defendant failed to disclose one or more material fact(s) about the subject matters

-the defendant failed to disclose the material fact(s) that cause the plaintiff to have false impression

-when the defendant failed to disclose the material fact(s), the defendant knew that the failure would create false impression

- the plaintiff relied on the false impression