General

Difference Between Fraud and Misrepresentation

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Main Difference

The main difference between Fraud and Misrepresentation is that Fraud is a willful misstatement of a fact, whereas Misrepresentation is the clear misconception of an error as a true statement.

Fraud vs. Misrepresentation

Fraud is an untrue statement made by one party with the other party to enter the contract. In contrast, misrepresentation is making one party believe a wrong account as a true one. Fraud is made with an ambition of deceiving others; on the other hand, misrepresentation is to create a false statement while considering it to be accurate, and that does not anticipate to mislead the other party to the contract.

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Fraud is the act of deception intentionally made by one party to cause another party to enter the contract, on the flip side, misrepresentation is the representation of misstatement, made innocently so that another party agrees for the agreement. Fraud is made intentionally and knowingly, while misrepresentation is an unintentional and unknown act of considering a false statement right.

Any form of fraud is more dangerous than any type of negligence or misrepresentation. The scam involves purposeful falsification and fabrication of material facts to deceive and harm either any business or some company, whereas misrepresentation is not as intentional as a fraud, the misrepresentation has the factor of negligence more prominent than willful planning to harm others.

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Fraud is defined as communicating false information intentionally or willingly to gain the consent of another party, whereas misrepresentation is false communication of data or fact unintentionally. Thus, we can say that if a party deceives another party intentionally, then it is a fraud. Still, if a party communicates false or fabricated information unknowingly or unintentionally, then it is said to be a misrepresentation.

Comparison Chart

FraudMisrepresentation
Willful or intentional deceiving of other people for one’s benefit is called fraud.Unintentional communication of false information made innocently, is called misrepresentation.
Consent
Consent of one party made by tricking by the other partyMisrepresentation of information by another party adds permission of the party
Type of Act
The action of dishonest by not imparting the original informationA mistake made innocently or unknowingly while considering the information to be true
Result
The party swayed can cancel the contractThe party mistreated can cancel the contract
Intention
Intention to lie and deceive peopleNo plan to deceive people
Under Law
People who commit fraud are punished according to lawPeople involved in misrepresentation are not liable to punishment under the law
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What is Fraud?

Communication of false information willingly or knowingly to obtain people’s consent, is called fraud. When a person knowingly or intentionally deceives other persons to get his benefit by hook or by crook, this act is called misrepresentation. The person knows about the material facts but misrepresents them to gain the consent of others. In fraud, a person makes the promise but has no intention to fulfill it. The only aim of a fraud person is to achieve his goals by stepping on any person’s head.

A deceptive act made by one party to influence another party to enter a contract is called fraud, which is a conscious effort to make others suffer and being swayed. A fraud party gives an untrue statement to another party whose sole purpose is to induce other parties to enter the contract. Fraud person enforces the suffered party not to sue the fraud person for damages but can violate the contract. The fraud party knows the truth but consciously and deliberately makes the false representation before the other party to make them enter the contract.

The aggrieved party believes in the statement considering it to be accurate and suffer in return, having a lot of damage and loss. After being manipulated, it is upon the aggrieved party to sue the swindler party for the fraud or make them pay for the injuries and cancel the contract. Example: Taking a loan from a person without having the intention to pay it back is an example of fraud.

What is Misrepresentation?

The act of false communication of facts made unconsciously or innocently, having no sense of betrayal, is called misrepresentation. If there is a purposeful false communication of events to gain the consent of another party to settle a contract, then it is called a fraud. In misrepresentation, there is no intention to deceive anyone. The misrepresented person doesn’t even know the truth himself. He communicates false information considering it to be accurate and hence considered as fraud by other parties, but he is innocent.

The misrepresented information must be related to facts and shouldn’t be demonstrated as opinion. The fraud person is for the sake of the law. He has to pay for the consequences, but a misrepresented person is set free as he is not involved in deceiving others intentionally. A misrepresentation is generally made where there is no intention of lying. Still, a statement is made carelessly without having a reasonable reason for believing it to be true or not. For a misrepresentation, knowing the credibility of the fact is considered unnecessary, and people are mistaken as a fraud while they are misrepresented.

Example

Selling the damaged things, i.e., TV at a high price without knowing that it is broken out actually is taken as misrepresentation. The seller and the buyer both don’t know that TV is already demolished, but when the buyer starts the TV, he founds that it is collapsed. Thus, he considers the seller as a fraud while he is misrepresented.

Key Differences

  1. Fraud is a conscious and willful misrepresentation of facts, while deception is an actual representation which is false.
  2. Fraud is related to lying and deceiving others to enter the contract, but misrepresentation is the statement of fact complete by one party, believing it to be true.
  3. The will makes fraud of deceiving and manipulating others, whereas misrepresentation is made by purely ignorance or neglect.
  4. When a false statement is made knowing that it is inaccurate, it is called as a fraud, while when a false statement is made by not knowing that it is wrong, then it is called as misrepresentation.
  5. In fraud, the party communicating information knows the truth; however, in misrepresentation, the party making representation does not even know the fact.
  6. In fraud, the suffered party can claim for the damage or loss sustained, on the flip side, in misrepresentation, the aggrieved party cannot claim damages for any harm or loss sustained.
  7. There is a firm intention of lying to others and concealment of facts in fraud, whereas there is no intentional or willful ambition of deceiving or harming others.
  8. Fraud person is punished according to the law, while the misrepresented person is not punished as he has no intention to deceive anyone.
  9. Fraud is an act of dishonesty, while misrepresentation is an act of mistake and negligence.

Conclusion

Fraud is a conscious and willful act of cheating others, while misrepresentation is an unintentional act. In deception, one party deceives the other party knowing the truth, but in distortion, both the parties are swayed considering the false information to be true.

Aimie Carlson

Aimie Carlson is an English language enthusiast who loves writing and has a master degree in English literature. Follow her on Twitter at @AimieCarlson

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