What is the Difference Between Fraud and Misrepresentation?

The main difference between fraud and misrepresentation lies in the intent of the party making the false statement. Here are the key differences between the two:

1. Intent: Fraud occurs when a party intentionally makes a false statement to deceive another party, with the knowledge that the statement is false or with a reckless disregard for its truth. In contrast, misrepresentation happens when a party unintentionally represents false information, believing it to be true.
2. Purpose: The purpose of misrepresentation is not necessarily to deceive the other party, whereas the purpose of fraud is to deceive the other party.
3. Consequences: In the event of fraud, the harmed party may sue for damages, including punitive damages. In the case of misrepresentation, the harmed party cannot sue for punitive damages, as the other party did not act with the intention to harm.
4. Contractual Outcomes: Misrepresentation generally renders a contract voidable, which means that either party can choose to terminate the contract. In cases of fraud, the contract may be held as void, as it was established based on the intentionally false statement of one party.

In summary, fraud is a deliberate and willful representation of false information to deceive another party, while misrepresentation is an unintentional act of providing false information. Fraud is considered more severe because it involves a deliberate intent to harm or deceive.

Comparative Table: Fraud vs Misrepresentation

The main difference between fraud and misrepresentation lies in the intent of the party providing false information. Here is a table outlining the key differences between the two:

In fraud, the party making the false representation knows it is false and intends to deceive the other party, while in misrepresentation, the party may not be aware of the falsity of the statement or may not intend to deceive the other party.