Correct option is A
Statement 1: Both render the contract voidable (Correct)
· Fraud and misrepresentation both make a contract voidable under the Indian Contract Act, 1872. Section 17 defines fraud, while Section 18 defines misrepresentation. Both give the innocent party the option to either rescind the contract or enforce it, depending on the circumstances.
Statement 2: Fraud renders a cause of action in tort for damages (Correct)
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Fraud not only makes the contract voidable but also gives rise to a
tortious claim for damages. In a case of fraud, the aggrieved party can claim compensation for the harm caused due to the fraudulent misrepresentation, as fraud involves intentional deceit.
Statement 3: Simple misrepresentation is also a tort (Incorrect)
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Misrepresentation is different from fraud because it may be innocent or negligent. Simple misrepresentation (innocent misrepresentation) does not automatically lead to a claim for damages in tort. It only gives the injured party the right to rescind the contract, unless there was negligence or intentional deceit involved.
Information Booster
· Fraud is the intentional act of deceiving another party to gain some advantage, making both the contract voidable and giving rise to a tort action for damages.
· Misrepresentation, on the other hand, may be innocent or negligent. Only negligent or fraudulent misrepresentation gives rise to a claim for damages.
Additional Knowledge
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Innocent misrepresentation: This occurs when a false statement is made without intent to deceive, which generally does not create a claim for damages in tort.
·
Fraudulent misrepresentation: This occurs when a false statement is made with the intention to deceive, allowing for claims in both contract and tort law.
