Misrepresentation Of Contract Analysis

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Section 142 of the Indian Contracts Act states that Guarantee obtained by misrepresentation, invalid- Any guarantee which has been obtained by means of misrepresentation made by the creditor, or with his knowledge and assent, concerning a material part of the transaction, is invalid. Section 143 of the Indian Contracts Act states that Guarantee obtained by concealment invalid- Any guarantee which the creditor has obtained by means of keeping silence as to a material circumstances, is invalid. Under English law it is settled that the contract of suretyship is one in which there is no universal obligation to make disclosure’, it is not like a contract of insurance, liable to be avoided by the mere non-disclosure of any material fact whatever, still the surety is entitled to know so much as will tell him what is the transaction for which he is making himself answerable, and he will be discharged if there is either active misrepresentation of the matter by the creditor, or silence amounting in the circumstances to misrepresentation. Ordinary contracts of guarantee are not amongst those requiring uberrima fides on the part of the creditor towards the surety. But a contract of guarantee, like any other contract, is liable to be avoided if included by material misrepresentation of an existing fact, even if made innocently. Misrepresentation may consist of direct assertion of a fact which is not a fact, or may consist of statement by the creditor which will tell only such part of the truth, as is likely mislead, or a statement made by the creditor believing it to be true, but later discovered to be untrue, or later becoming untrue to his knowledge. A guarantee caused by the misrepresentation may be invalid if the misrepresentation has bee... ... middle of paper ... ...incipal, disclosed or undisclosed, but nevertheless poses as an agent. He cannot demand performance from the third party if he has been acting, in reality, on his own account, and not as agent. This section is attracted when there is no named principal. If a person professing to act as an agent for an undisclosed principal enters into a contract with another, and there is no undisclosed principal in fact, the present section applies, and he cannot sue on the contract. Here disputes are between two persons, one of whom is a falsely professed agent of third party, it does not apply where the dispute is between the principal and his agent. This section does not render the contract void. It only provides that the alleged agent cannot require its performance. Therefore, being enforceable at the instance of one of the parties, and not the other, it is a voidable contract.

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