Given below are two statements: One is labelled as Assertion A and the other is labelled as Reason R.
Assertion A: A, the owner of a ship by fraudulently representing her to be seaworthy induces B, an underwriter to insure the ship.
Reason R: B can obtain cancellation of the policy, as it is a fraud on account of fraudulent misrepresentation under the contract act.
In the light of the above statements, choose the correct answer from the options given below:

Correct option is A

The given assertion states that the ship owner, A, fraudulently induces B (the underwriter) to insure the ship by misrepresenting it as seaworthy. This is a case of fraudulent misrepresentation.

The reason explains that B can cancel the policy because fraudulent misrepresentation makes the contract voidable under the Contract Act. In the case of misrepresentation, the party deceived has the right to seek cancellation of the contract, as it was entered into on the basis of false information.

Hence, both Assertion A and Reason R are true. Furthermore, Reason R correctly explains why B can cancel the policy, as it directly addresses the fraudulent misrepresentation mentioned in Assertion A.

Hence, both A and R are true and R is the correct explanation of A.

Information Booster:

1. Fraudulent misrepresentation in contract law occurs when one party deliberately provides false information to induce another party to enter into a contract. The injured party has the right to cancel the contract and seek compensation.
2. In this case, the underwriter (B) has the legal right to cancel the policy due to the fraudulent misrepresentation made by the ship owner (A).
3. It is important to note that fraudulent misrepresentation not only allows for cancellation of contracts but also may entitle the injured party to damages.