Misrepresentation

Misrepresentation, a false statement affecting the validity of a contract or transfer of property. Wilful misrepresentation is the same as Fraud (q.v.). Innocent misrepresentation affects the formation of a contract in cases where one party has to rely on statements made by the other. An insurance company grants a policy in reliance on the statements made by the insured; a purchaser of land must rely on statements made by the vendor; an applicant for shares in a company relies on the truth of the prospectus. In these cases even unintentional misrepresentation will prevent the party responsible for it from enforcing the agreement against the party who has been misled. There are also cases in which a party is taken to warrant the truth of his statement; in these cases even an innocent misstatement may give the other party a right to be discharged altogether, or a right to claim damages for breach of warranty.