Mb0051– Legal Aspects of Business-Assignment1 & 2

MB0051 - Legal Aspects of Business - Set 1

Question 1: Distinguish between fraud and misrepresentation.

Answer:

Distinction between fraud and misrepresentation:

Sometimes the terms fraud and misrepresentation are used inter-changeably by readers however they are actually different. There is not a much difference between the two but a little one as misrepresentation does not directly mean fraud. Below is a table on the salient points to distinguish the terms:

|Fraud |Misrepresentation |
|The word fraud comes from the Middle English word “fraude” taken |Misrepresentation is a type of lying or falsehood in which a person|
|from the Old French and derived from the Latin “fraus”. The word |says or does something that would lead another person to believe |
|fraud means a deliberate form of deception that is practiced to |something that is not “in accordance with the facts”. |
|secure some sort of unlawful and unfair gain. | |
|Implies on intention to deceive, hence it is intentional or willful|It is an innocent wrong without any intention to deceive. The |
|wrong. |person making the statement believes it to be true. |
|A civil wrong which entitles a party to claim damages in addition |It gives only the right to rescind the contract and there can be no|
|to the right to rescind the contract. |suit for damages. |
|In fraud, the person making the representation does not himself |In situations of innocent misrepresentation the person making the |
|believe in the truth of the statement he is making. n cases of |statement may believe that what he is saying is true. This is