Innocent Misrepresentation vs. Misrepresentation

Attribute	Innocent Misrepresentation	Misrepresentation
Intent	Unintentional	Intentional
Knowledge	Believed to be true	Knowingly false
Effect	Can still lead to contract voiding	Can lead to contract voiding
Remedies	Rescission, damages	Rescission, damages

Definition

Both innocent misrepresentation and misrepresentation are types of false statements made during a business transaction. Misrepresentation occurs when a party makes a false statement of fact with the intention to deceive the other party, leading to a contract being formed based on false information. Innocent misrepresentation, on the other hand, occurs when a party makes a false statement of fact without the intention to deceive, but still leads to a contract being formed based on incorrect information.

Intent

One of the key differences between innocent misrepresentation and misrepresentation is the intent of the party making the false statement. In misrepresentation, the party making the false statement does so with the intention to deceive the other party. This can be seen as a deliberate act of dishonesty in order to gain an advantage in the transaction. In contrast, in innocent misrepresentation, the party making the false statement does so without any intention to deceive. This could be due to a mistake, misunderstanding, or lack of knowledge about the true facts.

Effect on Contract

Another important distinction between innocent misrepresentation and misrepresentation is the effect it has on the contract. In cases of misrepresentation, the contract is considered voidable, meaning that the innocent party has the option to rescind the contract and seek damages for any losses suffered as a result of the false statement. The party who made the misrepresentation may also be liable for fraudulent misrepresentation, which can result in additional damages. In cases of innocent misrepresentation, the contract is also considered voidable, but the innocent party may only seek damages and not rescind the contract.

Knowledge and Reasonableness

When determining whether a false statement constitutes innocent misrepresentation or misrepresentation, the courts will consider the knowledge and reasonableness of the party making the statement. In cases of misrepresentation, the party making the false statement is expected to have known that the statement was false or to have made the statement recklessly without regard for its truthfulness. In cases of innocent misrepresentation, the party making the false statement may have genuinely believed the statement to be true and acted in a reasonable manner under the circumstances.

Remedies

Both innocent misrepresentation and misrepresentation have legal remedies available to the innocent party. In cases of misrepresentation, the innocent party may seek rescission of the contract, meaning that the contract is canceled and both parties are restored to their original positions before the contract was formed. The innocent party may also seek damages for any losses suffered as a result of the false statement. In cases of innocent misrepresentation, the innocent party may also seek damages for any losses suffered, but rescission of the contract is not always available as a remedy.

Conclusion

In conclusion, innocent misrepresentation and misrepresentation are both types of false statements made during a business transaction, but they differ in terms of intent, effect on the contract, knowledge and reasonableness, and available remedies. Misrepresentation involves a deliberate false statement made with the intention to deceive, while innocent misrepresentation involves a false statement made without any intention to deceive. Understanding the differences between these two types of misrepresentation is important for parties entering into contracts to ensure that they are protected in case of false statements.