Define Misrepresentation and Fraud. Explain the difference between Fraud and Misrepresentation as per the Indian Contract Act, 1872. OR What is the…

(a) Definition of Fraud under Section 17 of the Indian Contract Act,1872: '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 an intent to deceive another party thereto or his agent, or to induce him to enter into the contract: (1) the suggestion, as a fact, of that which is not true, by one who does not believe it to be true; (2) the active concealment of a fact by one having knowledge or belief of the fact; (3) a promise made without any intention of performing it; (4) any other act fitted to deceive; (5) any such act or omission as the law specially declares to be fraudulent. According to Section 18, there is misrepresentation: (1) Statement of fact, which of false, would constitute misrepresentation if the maker believes it to be true but which is not justified by the information he possesses; (2) When there is a breach of duty by a person without any intention to deceive which brings an advantage to him; (3) When a party causes, even though done innocently, the other party to the agreement to make a mistake as to the subject matter. Distinction between fraud and misrepresentation: Basis of difference Fraud Misrepresentation Intention To deceive the other party by hiding the truth. There is no such intention to deceive the other party. Knowledge of truth The person making the suggestion believes that the statement as untrue. The person making the statement believes it to be true, although it is not true. Rescission of the contract and claim for damages The injured party can repudiate the contract and claim damages. The injured party is entitled to repudiate the contract or sue for restitution but cannot claim the damages. Means to discover the truth The party using the fraudulent act cannot secure or protect himself by saying that the injured party had means to discover the truth. Party can always plead that the injured party had the means to discover the truth. OR / Alternative Solution: Essentials of a contingent contract (a) The performance of a contingent contract would depend upon the happening or non-happening of some event or condition. The condition may be precedent or subsequent. (b) The event referred to as collateral to the contract. The event is not part of the contract. The event should be neither performance promised nor a consideration for a promise. (c) The contingent event should not be a mere ‘will’ of the promisor. The event should be contingent in addition to being the will of the promisor. (d) The event must be uncertain. Where the event is certain or bound to happen, the contract is due to be performed, then it is a not contingent contract. Definition of ‘Contingent Contract’ (Section 31 of the Indian Contract Act,1872) “A contract to do or not to do something, if some event, collateral to such contract, does or does not happen”. Rules Relating to Enforcement of a contingent contract: The rules relating to enforcement of a contingent contract are laid down in sections - 32,33,34,35 and36of the Act. (a) Enforcement of contracts contingent on an event happening: Section 32 says that “where a contingent contract is made to do or not to do anything if an uncertain future event happens, it cannot be enforced by law unless and until that event has happened. If the event becomes impossible, such contracts become void”. (b) Enforcement of contracts contingent on an event not happening: Section 33 says that “Where a contingent contract is made to do or not do anything if an uncertain future event does not happen, it can be enforced only when the happening of that event becomes impossible and not before”. (c) A contract would cease to be enforceable if it is contingent upon the conduct of a living person when that living person does something to make the ‘event’ or ‘conduct’ as impossible of happening. Section 34 says that “if a contract is contingent upon as to how a person will act at an unspecified time, the event shall be considered to have become impossible when such person does anything which renders it impossible that he should so act within any definite time or otherwise than under further contingencies”. (d) Contingent on happening of specified event within the fixed time: Section 35 says that Contingent contracts to do or not to do anything, if a specified uncertain event happens within a fixed time, becomes void if, at the expiration of time fixed, such event has not happened, or if, before the time fixed, such event becomes impossible. (e) Contingent on specified event not happening within fixed time: Section 35 also says that - “Contingent contracts to do or not to do anything, if a specified uncertain event does not happen within a fixed time, may be enforced by law when the time fixed has expired, and such event has not happened or before the time fixed has expired, if it becomes certain that such event will not happen”. (f) Contingent on an impossible event (Section 36): Contingent agreements to do or not to do anything, if an impossible event happens are void, whether the impossibility of the event is known or not to the parties to the agreement at the time when it is made.