The importance of the term ‘misrepresentation’ can be inferred from the fact that “free consent” which is inevitable for an agreement to be enforceable under Section 14 of Indian Contract Act, 1872 is rendered negative if misrepresentation is proved. In other words, misrepresentation to any party in a contract so as to induce them for consent renders the contract void.
Section 18 of the Indian Contract Act, 1872 (the “Contract Act”) defines misrepresentation. This section is quoted below:
“Misrepresentation” means and includes –
(1) the positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true;
(2) any breach of duty which, without an intent to deceive, gains an advantage to the person committing it, or any one claiming under him, by misleading another to his prejudice, or to the prejudice of any one claiming under him;
(3) causing, however innocently, a party to an agreement, to make a mistake as to the substance of the thing which is the subject of the agreement.”
With regard to contract, the general principal is that if one party has induced the other to enter into a contract by misrepresentation, though innocently of any material fact specially within his own knowledge, the party misled can avoid the contract. The party who was induced by misrepresentation to enter into a contract, has two remedies open to him; (i) to elect to rescind the contract, or (ii) to seek enforcement of representation and insist upon being placed in the same position as if the contract was performed by claiming damages.”
Under Section 19 of the Contract Act, the right of rescission is available where consent is caused by misrepresentation.
Section 19 of the Contract Act provides for voidability of agreements without free consent. This section is quoted below:
“When consent to an agreement is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused.
A party to a contract, whose consent was caused by fraud or misrepresentation, may, if he thinks fit, insist that the contract shall be performed, and that he shall be put in the position in which he would have been if the representations made had been true.
Exception: If such consent was caused by misrepresentation or by silence, fraudulent within the meaning of section 17, the contract, nevertheless, is not voidable, if the party whose consent was so caused had the means of discovering the truth with ordinary diligence.
Explanation: A fraud or misrepresentation which did not cause the consent to a contract of the party on whom such fraud was practiced, or to whom such misrepresentation was made, does not render a contract voidable.”
A, by a misrepresentation, leads B erroneously to believe that five hundred mounds of indigo are made annually at A’s factory. B examines the accounts of the factory, which show that only four hundred mounds of indigo have been made. After this B buys the factory. The contract is not voidable on account of A’s misrepresentation because of lack of ‘due diligence’.
Section 19A of Indian Contract Act, 1872 states that:-
“When consent to an agreement is caused by undue influence, the agreement is a contract voidable at the option of the party whose consent was so caused. Any such contract may be set aside absolutely or, if the party who was entitled to avoid it has received any benefit thereunder, upon such terms and conditions as to the Court may seem just”.
A Comparative Study of Correlation Between Misrepresentation and Sale Of Goods
Section 3 of the Sale of Goods Act states that:
“The unrepealed provisions of the Contract Act save in so far as they are inconsistent with the express provisions of the Sale of Goods Act, shall continue to apply to contracts for the sale of goods”.
Section 12 of the Sale of Goods Act, 1930 provides the difference between ‘condition’ and ‘warranty’ and read as follows:-
“12. Condition and warranty, – (1) A stipulation in a contract of sale with reference to goods which are the subject thereof may be a condition or a warranty.
(2) A condition is a stipulation essential to the main purpose of the contract, the breach of which gives rise to a right to treat the contract as repudiated.
(3) A warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives rise to a claim for damages but not to a right to reject the goods and treat the contract as repudiated.
(4) Whether a stipulation in a contract of sale is a condition or a warranty depends in each case on the construction of the contract. A stipulation may be a condition, though called a warranty in the contract”.
Further, Section 13 of the Sale of Goods Act, 1930 provides when ‘condition’ to be treated as `warranty’, relevant part of sub-section (1) & (2) thereof reads as under:-
“13. When condition to be treated as warranty. – (1) Where a contract of sale is subject to any condition to be fulfilled by the seller, the buyer may waive the condition or elect to treat the breach of the condition as a breach of warranty and not as a ground for treating the contract as repudiated.
(2) Where a contract of sale is not severable and the buyer has accepted the goods or part thereof, the breach of any condition to be fulfilled by the seller can only be treated as a breach of warranty and not as a ground for rejecting the goods and treating the contract rejecting the goods and treating the contract as repudiated, unless there is a term of the contract, express or implied, to that effect.”
Distinction Between Misrepresentation and Fraud: Clearing the Imbroglio
Definition of Fraud as per Indian Contract Act, 1872:
Section 17:- “Fraud” means and includes any of the following acts committed by a party to a contract, or with his connivance, or by his agent, with intent to deceive another party thereto or his agent, or to induce him to enter into the contract:
(1) the suggestion, as a fact, of that which is not true by one who does not believe it to be true;
(2) the active concealment of a fact by one having knowledge or belief of the fact;
(3) a promise made without any intention of performing it;
(4) any other act fitted to deceive;
(5) any such act or omission as the law specially declares to be fraudulent.
Explanation: Mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud, unless the circumstances of the case are such that, regard being had to them, it is the duty of the person keeping silence to speak, or unless his silence is, in itself, equivalent to speech.
(a) A sells, by auction, to B, a horse which A knows to be unsound. A says nothing to B about the horse’s unsoundness. This is not fraud in A.
As we can infer from the Indian Contract Act, misrepresentation is an innocent act of deceit whereas fraud inevitably includes the intention to deceive. As the deception is deliberate, the contract becomes void after fraud is proved whereas in case of misrepresentation the contract is voidable at the option of the party deceived. However, both are forms of undue influence as per Section 16 of Indian Contract Act.
Bellachi (Dead) by LR Vs. Pakeeran JT 2009(4) SC 298
Subject matter of the suit was a deed of sale dated 7th October, 1999 executed by the petitioner in favour of the respondent. The amount of consideration was shown therein to be a sum of Rs. 20,000/.Contention of the appellant in the said suit was that the said deed of sale is vitiated by misrepresentation, undue influence, fraud and collusion as she was made to believe that she would obtain financial assistance by executing the said document. According to her, she had reposed complete faith and trust in her brother who used to visit her place often. The law does not envisage raising of a presumption in favour of undue influence. A party alleging the same must prove the same subject of course to just exceptions. Hence, the plaint was dismissed.
State of Karnataka and Anr. Vs. All India Manufaturers Organization and Ors. AIR 2006 SC 1846
State of Karnataka decided to take up “Bangalore-Mysore Infrastructure Corridor Project” with a consortium. For the very same, Memorandum of understanding (MOU) was entered into between the petitioner and a consortium of companies.Government order (GO) was also passed. Members of consortium entered into an agreement for assigning their respective rights under the GO and MOU in favour of Nandi Infrastructure Corridor Enterprises Ltd. Nandi submitted a framework agreement (FWA) which was approved by the petitioner.One of the key obligations of petitioner under FWA was to make land available.Karnataka Industrial Areas Development Board entered into an agreement with Nandi for acquisition of private land. Henceforth, notifications were issued.FWA was challenged in public interest writ petition. The petitioner took the plea that they had given their consent due to misrepresentation by Nandi. The inference drawn by the High Court was that the plea of fraud and misrepresentation sought to be raised was not only an afterthought but also false to the knowledge of the State Government. The High Court, therefore, observed (vide Paragraph 27): “It is unfortunate that the petitioners and the State Government have chosen to raise this bogie (sic- bogey) to defeat the public project subserving public interest. On appeal, Supreme Court upheld the view of High Court regarding the plea of misrepresentation.
Union of India and Ors. Vs. R.P. Yadav AIR 2000 SC 2252
A contract had been entered between Indian navy and artificial apprentice. The question dealt with was whether artificer apprentice of Indian Navy who had been given re-engagement for certain period after obtaining his consent for it entitled to withdraw consent and demand his release from force as of right. It is the case of respondant in his writ petition that he agreed to be reengaged was based on the misrepresentation on the part of the appellants to him that he had only completed 11 years of pensionable service and that he required another four years to earn the pension. As such, it was contended he had a right to rescind the contract under Section 19 of the Contract Act. The appellants by sending Raj Kumar the “Expiry of Engagement Serial” expressly represented to him that he had put in only 11 years of pensionable service and that he should apply for extension for four years to qualify for pension. Therefore, the court held that the consent of artificial apprentice was obtained through misrepresentation.
Sri Tarsem Singh Vs. Sukhminder Singh AIR 1998 SC 1400
Parties entered into a contract for sale of certain land and certain amount was paid to petitioner as earnest money. Suit for specific performance filed when petitioner did not execute sale deed and decreed by Trial Court. In appeal Additional District Judge observed that both parties suffered from mistake of fact as to area of land and sale. Consideration was already paid by the respondent. Decree for specific performance was not passed but decree for refund of earnest money was passed which was confirmed by High Court and Supreme Court. The Supreme Court upheld that the respondent was subjected to misrepresentation by the petitioner as the latter made a false promise to sell the disputed property.
M/s. Arosan Enetrprises Ltd. Vs. Union of India & Anr. AIR 1999 SC 3804
The factual score depicts that on 24th October, 1989, the appellant furnished a performance bank guarantee for $ 29,28,000 and upon bank guarantee being furnished, the Government of India assigned the contract to the Food Corporation of India (FCI) under Clause 20 of the Agreement. FCI also in its turn opened a Letter of Credit for the full value of the contract though, however, as the records depict that while on 26th October, 1989, the Letter of Credit was opened by FCI but its authentication was not effected within the delivery date i.e. 31st October, 1989. Point to be noted is that the Bank, can not, by merely stating that there was non-supply of goods by the appellant, use the words “fraud or misrepresentation” for purposes of coming under the exception. The dispute as to non-supply of goods was a matter between the seller and buyer and did not, as stated in the above decision, provide any cause of action for the Bank against the seller.
Where to Find Those Efficient and Hardworking Affiliates?
Everyone wants a hardworking affiliate, employee, associate, partner, or even spouse, and why not? It’s the next best thing to doing the work yourself. However with the massive outbreak of work and income opportunities available online, how can you beat everyone else and find that one (or more) ideal person who will make your online business explode with success? Here are some of the most ingenious and uncommon ways to snag the idea affiliates for your affiliate program
Direct Sales Agents
Direct sales people are really one of the most enterprising, hard-working individuals in business. They mostly work on commissions or rebates and are willing to literally go door-to-door offering their products to anyone and everyone they bump into. Imagine how much easier their job would be if they could be an affiliate and simply work via the Internet and a mobile device or desktop.
Also, most direct sales people tend to carry more than one brand in their product arsenal so signing up as an affiliate would be almost the same type of work but using a different approach.
Colleges and Universities
Many college kids would be interested in a part-time income opportunity if it would mean funds to help pay for their education, loan, or partying. All you have to do is make sure to offer them products they can endorse as a student.
Did you know that the U.S. Census Bureau’s latest annual report show that 75% of U.S. businesses used freelancers in 2011? Freelancers earned a whopping US$990 billion in 2011 which is a 4.1% increase from the previous year. The only industries where the number of freelancers decreased were in insurance, finance, and construction. Most probably your affiliate program isn’t a part of these 3 industries.
Furthermore, online business and finance experts are predicting the growth to increase incrementally every year even with an economy that is improving. People just want income security and more control over their earnings. With the spate of lay-offs, it’s understandable why many would prefer to work as an affiliate than as an employee.
Scout For Them At Affiliate Conventions
There are annual affiliate conventions held in different cities around the country. You should try to catch one when it is held somewhere near your location. The average turn-out for these types of conventions has increased regularly over the years. Last year, many of them were sold out weeks before the event.
The US Census Bureau has said that as of 2012, 15% of Americans are poor, 43% of young adults depend on their parents to some extent for money. Even more surprising is that the median income of young adults in 1982 was $31,583 and last year it was $30,604 for the same age group! Income is dropping and people are looking for ways to earn additional income outside of their 9 to 5 jobs. That’s where you can come in playing the hero and helping others realize their dream income.
Finally, go online and talk about your product. Make the affiliate marketers come to you and have the luxury of picking the best candidates. You will need some help in marketing your affiliate program so target a marketer who’s experienced in affiliate program and SEO.
Recession Is Here… Six Costly Mistakes Home Sellers Make During Recessions And How To Avoid Them
The U.S. is officially in a recession. What is a recession? A recession is a business cycle contraction or general economic decline due to significant drop in spending and other commercial activities. Most pundits and politicians will blame Covid-19 crisis for the recession, but even pre-Covid-19 the proverbial writing was on the wall.
The U.S. had over 120 months of economic growth, which was the longest expansion in the modern history. Other indicators, such as negative yield spread on treasuries (long term bonds having lower interest rates than short term T-notes), were pointing to an imminent change of the economic cycle and an impending recession. The only real question was: when and how bad?
Then Covid-19 came… If the cycle was going to change anyway, Covid-19 acted as a huge and unexpected accelerant to make the recession much more immediate and severe.
Inevitably during recessions all classes of real estate, including residential homes and condominiums, will be negatively impacted as lower consumer spending and higher unemployment rates affect real estate prices and marketing times.
Here are the six costly mistakes home and other real property sellers make during recessions and how to avoid them:
Mistake #1: This will pass and real estate market will be hot again soon
First thing to remember is that real estate cycles are much longer than general economic cycles. Even if the general economy recovers, which eventually it always does, a typical real estate cycle takes as long as 10 to 15 years. The cycle has four key stages: Top, Decline, Bottom and Rise.
Let us consider the last real estate cycle, which lasted approximately 14 years:
- 2006 – Prices hit the Top
- 2006 to 2012 – Prices Decline
- 2012 – Prices hit the Bottom (Trough)
- 2012 to 2019 – Prices Rise*
- 2020 – Prices hit the Top
- 2020 to? – Prices Decline
*NOTE: In 2016 the national residential real estate price index reached its pre-recession 2006 peak levels. It took 10 years for the real estate market to recover.
The way to avoid this mistake is to recognize that real estate cycles take years to run and plan accordingly. Additionally, nobody knows for sure when the prices will hit the top or bottom until after the fact.
Mistake #2: Low interest rates will make the economy and real estate market rebound
Between 2006 and 2011 the interest rates (Fed Funds) were continuously cut by the Federal Reserve Board and went from low 5% to almost 0%. However, that did not stop the real estate recession and depreciation of property values.
Undoubtedly, low interest rates made the economic decline and real estate recession less severe and saved some properties from foreclosures, but it still took six painful years for the real estate market to hit the bottom and then four more years for the prices to go back to their pre-recession levels.
Some markets had never fully recovered. For example, residential home prices in some parts of California, Arizona and Nevada are still below their 2006 highs.
To avoid this mistake, one needs to realize that although low interest rates help stimulate the economy and the real estate market, they do not cure them.
Mistake #3: I don’t need to sell now, so I don’t care
If you do not need to sell until the cycle plays out, which typically is over ten years, then you will not be as affected, especially if you have a strong equity position, limited mortgage debt, and solid liquid assets.
However, it is good to keep in mind that “life happens” and either professional or personal circumstances can change and we may need to sell property before the downturn runs its course.
Furthermore, if a property has a mortgages and its value declines to the point being “upside down,” meaning the mortgage loan balance exceeds the value of the property, then the options of selling, refinancing or even obtaining an equity line of credit, will be significantly limited.
This does not mean that everybody should be rushing into selling their real estate if there is no need to do so, just keep in mind that circumstances may and often do change and property options will be affected, so plan in advance. As one wise proverb says: “Dig your well before your thirst.”
Mistake #4: I’m selling, but I won’t sell below my “bottom line” price
This is a common and potentially very costly mistake. Generally speaking, every seller wants to sell for the highest price and every buyer wants to pay the lowest price. That’s nothing new. When selling real estate, most sellers want to achieve a certain price point and/or have a “bottom line.”
However, it is important to understand that the market does not care what the Seller, or his/her Agent, think the property value should be at. The market value is a price a willing and able buyer will pay, when a property is offered on an open market for a reasonable amount of time.
Overpricing property based on Seller’s subjective value or what is sometimes called an “aspirational price,” especially in a declining market, is a sure first step to losing money. When a property lingers on the market for an extended period of time, carrying costs will continue to accumulate and property value will depreciate in line with the market conditions.
Additionally, properties with prolonged marketing times tend to get “stale” and attract fewer buyers. The solution is to honestly assess your selling objectives, including the desired time-frame, evaluate your property’s attributes and physical condition, analyze comparable sales and market conditions, and then decide on market-based pricing and marketing strategies.
Mistake #5: I will list my property for sale only with Agent who promises the highest price
Real estate is a competitive business and real estate agents compete to list properties for sale which generate their sales commission incomes. It is not unusual that Seller will interview several agents before signing an exclusive listing agreement and go with the agent who agrees to list the property at the highest price, often regardless if such price is market-based.
Similarly to Mistake #4, this mistake can be very damaging to Sellers, as overpriced properties stay on the market for extended periods of time costing Sellers carrying expenses such as mortgage payments, property taxes, insurance, utilities and maintenance.
Furthermore, there is the “opportunity cost” since the equity is “frozen,” and it cannot be deployed elsewhere till the property is sold. However, the most expensive cost is the loss of property value while the real estate market deteriorates.
During the last recession, we have seen multiple cases where overpriced properties stayed on the market for years and ended up selling for 25% to 40% below their initial fair market values.
The solution is to make sure that your pricing strategy is based on the market, not empty promises or wishful thinking.
Mistake #6: I will list my property only with Agent who charges the lowest commission
Real estate commission rates are negotiable and not set by law. A commission usually represents the highest transactional expense in selling real properties and is typically split between Brokers and Agents who work on the transaction
Some real estate agents offer discounted commissions, in order to induce Sellers to list their properties with them. But does paying a discounted commission ensure savings for the Seller? Not necessarily.
For example, if the final sales price is 5% to 10% below property’s highest market value, which is not that unusual, due to inadequate marketing, bad pricing strategy, and/or poor negotiation skills, it will easily wipe out any commission savings and actually cost the Seller tens of thousands of dollars in lost revenues.
The solution is to engage an agent who is a “Trusted Advisor,” not just a “Salesperson.” A Trusted Advisor will take his/her time and effort to do the following: 1) Perform Needs Analysis: listen and understand your property needs and concerns; 2) Prepare Property Analysis: thoroughly evaluate your property and market conditions; 3) Execute Sales and Marketing Plan: prepare and implement custom sales and marketing plan for your property; and 4) Obtain Optimal Results: be your trusted advocate throughout the process and achieve the best possible outcome.
Finding such a real estate professional may not be always easy, but it certainly is worth the effort and will pay off at the end.
In conclusion, this article has outlined six costly mistakes real estate Sellers make during recessions and how to avoid them. The first mistake is not understanding that real estate cycles are long and take years. The second mistake is a misconception that low interest rates alone will create a recovery. Another mistake is not realizing that circumstances may change and not planning in advance. Mistakes number four, five and six pertain to understanding the market value, proper pricing and selecting the right real estate professional.
By understanding and avoiding these mistakes, real estate Sellers have significantly better chances of minimizing the negative impact of a recession while selling their properties.
Useful Tips To Build The Best Gaming Computer
Every gamer will want their computer to be the best gaming computer among their peers. Sometimes, with a little knowledge and tips and tricks, it is possible to build the best gaming computer and show it off to your peers. This article will show you how:
1) You can’t get the best gaming computer from computer retailers
If you want to get the best gaming computer, you have to build your own. Different gamers have different requirement for their gaming machine. Unless you are willing to pay a high price, you will not be able to buy a commercial computer that fulfills all your gaming needs. The only option you have is to build your own gaming computer.
2) You don’t have to be rich to build the best gaming computer
It is not necessary to burn a hole in your pocket to build the best gaming computer. With some due diligence, do some market research and compare prices around the marketplace. Merchant such as TigerDirect and NewEgg give regular discount to their products and you could save a lot of money if you catch them during their promotional period.
3) Most expensive parts do not have to be the best part
Sometime, the latest model or the most expensive model does not have to be the best part for your computer. It requires various components to work together to form the best computer system. When choosing a computer part, what matters is how well it can integrate with the rest of the components. Compatibility is more important than individual performance. What use is there if you spend lot of money on the latest quad-core processor and find that your motherboard doesn’t support it?
4) You don’t need to change the whole PC to own the best gaming computer
It is a misconception that you have to change the whole gaming machine to build the best gaming computer. If you already have a good barebone system, what you need to do is to upgrade the necessary parts and your gaming computer can roar back to life instantly.
5) Brand is important
Unless you want to see your computer system malfunction every few days, it is important that you purchase the parts from branded manufacturers with strict quality control. Motherboard brand such as Gigabyte, ABIT, ASUS are some quality brands that you can consider
If you follow diligently to the tips stated above. You will be on your way to build the best gaming computer. While price can be an issue, it is better not to scrimp on important computer parts such as motherboard, CPU, RAM and graphics card as it will cost you more to upgrade in the future.
Where to Find Those Efficient and Hardworking Affiliates?
Recession Is Here… Six Costly Mistakes Home Sellers Make During Recessions And How To Avoid Them
Useful Tips To Build The Best Gaming Computer
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