Q.In distinguishing fraud from misrepresentation, which of the following statements is correct?
(A) Both are always committed with an intention to deceive
(B) In fraud, the person making the false statement believes it to be true; in misrepresentation, they know it is false
(C) In fraud, the person making the false statement knows it is false (or has no belief in its truth); in misrepresentation, the statement is made innocently, believing it to be true
(D) Misrepresentation entitles the injured party to claim damages, but fraud does not

The dividing line between fraud and misrepresentation is entirely about the state of mind of the person making the false statement.

The entire distinction between fraud (Section 17) and misrepresentation (Section 18) turns on the state of mind of the person making the statement: fraud requires knowledge of falsity, or recklessness as to truth, coupled with intent to deceive; misrepresentation is made honestly and innocently, in the genuine (if mistaken) belief that it is true.

Option-by-option analysis:

• (A) Incorrect — misrepresentation is, by definition, made WITHOUT any intent to deceive.
• (B) Incorrect — this reverses the actual test entirely. …