Section18 defines misrepresentation as – “a false representation a fact made innocently or non disclosure of a material fact without any intention to deceive the other party.”
The essential features of misrepresentation are
1) Party to the contract making misrepresentation – The false statement must be by the party to the contract or by his agent or by his connivance. Further it must be addressed to the party who is misled. If not address to the party who has been misled it will not be misrepresentation.
For e.g. X who had purchase shares from the first allottee, sued the company on the ground of having purchase shares on the basis of false statement in the prospectus. Held, the prospectus was addressed to the first applicants for shares. It could not be supposed to extent to the other. Hence no misrepresentation ( Peek v. Gurny).
2) False representation – The statement made by the party must be false, but the person making statement must honestly believe it to be true.
3) Representation as to fact – it is very important that the false statement made must be of material facts.
A mere expression of once opinion is not statement of facts.
4) Object – The representation must be made with the view to inducing the other party to enter into a contract but having no intention to deceive the other.
5) Actually acted upon – The innocent party must have actually acted on the basis of the statement which turns out to be false.