Question

The following is not correct about ‘misrepresentation’ in a contract:

• A. Misrepresentation should be of a fact material to the contract.
• B. Unwarranted statement does not cause misrepresentation.
• C. Unwarranted statement which is believed to be true by the person making it causes misrepresentation.
• D. Inducing mistake as to the substance of the thing is misrepresentation.

Hint:

Even honest but false statements can amount to misrepresentation if they induce contract formation.

Answer 1

The Correct Option is B

Step 1: Definition.
Misrepresentation is a false statement of fact, made innocently, that induces another party to enter into a contract. 
Step 2: Analysis of statements.
(a) Correct — the false statement must be material to the contract.
(b) Incorrect — an unwarranted statement (without reasonable grounds) can indeed cause misrepresentation if it induces the contract.
(c) Correct — belief in truth does not prevent liability for misrepresentation.
(d) Correct — inducing a mistake as to the substance of the subject matter is misrepresentation. 
Step 3: Conclusion.
Since (b) is contrary to the legal definition, it is the incorrect statement. \[ \boxed{(b)} \]