Fraud, Misrepresentation, and Mistake

Abstract This chapter examines the provisions of the Indian Contract Act 1872 that govern fraud, misrepresentation, and mistake. The chapter advances three key arguments. First, the provisions of the Contract Act that govern fraud and misrepresentation suffer from a drafting flaw. Once the drafting error is recognised, it becomes clear that the Contract Act regulates the contractual consequences of fraud and misrepresentation in two stages: a consent-based first stage and a more pluralistic second stage. Second, the second paragraph of section 19 of the Contract Act requires a misrepresentee to be “put in the position in which he would have been if the representations made had been true”. This provision treats all pre-contractual representations as though they were enforceable promises. This is indefensible. Third, when considering the contractual consequences of the parties’ mistakes, nineteenth century English Courts were faced with the task of reconciling Pothier’s ‘Will Theory’ with the common law doctrine of objectivity. This conflict is also reflected in the Contract Act. Understanding this tension yields important insights as to the way in which the Contract Act regulates mistakes.