What constitutes misrepresentation in a contract?

Misrepresentation in a contract is defined as a false statement made by one party that induces another party to enter into the contract. This false statement can be about facts or circumstances related to the contract and leads the innocent party to make a decision they might not have made had they known the truth. It's important that the inducing statement be untrue and materially significant to the contract for it to constitute misrepresentation.

When someone enters a contract based on this false information, they may not fully understand what they are agreeing to, and thus they believe they are entering into a valid and genuine agreement. This differs significantly from scenarios such as vague statements or assumptions based on prior agreements, which may not directly contribute to the notion of misleading the other party with false information. Hence, the emphasis on a false statement as a basis for misrepresentation is crucial in understanding this concept.