Misrepresentation is a false statement of material fact made by one party to another during negotiations of a contract. It can be made by words or conduct, by false or misleading allegations, or by the concealment of material information. It is a key concept in contract law and consumer protection.

Misrepresentations can have serious consequences on contractual parties. In addition to the contract being voidable, a false statement that is material to the transaction may result in the defrauded party being granted compensation or damages. Furthermore, statements of misrepresentation can be grounds for civil actions or criminal prosecutions.

When a statement of fact is made, it may be accompanied by warranties or other forms of assurance, such as auto manufacturer warranties or certain types of insurance policies. In essence, a warranty enhances the representation of truth and may serve as additional protection in the case of misrepresentation.

Misrepresentations can be made by either negligence or fraud. In innocent misrepresentation, the representation is false, but the party making the representation is not aware of or had no intention of it being false or did not have a means to have known it was false. In such cases, the defrauded party is still entitled to recover any damages caused by the misrepresentation; this recovery could include the cost of the transaction or other financial losses.

In negligent misrepresentation, the person making the false statement does so with the knowledge of its falsity and the lack of care to get it checked. This lack of care is to meet a reasonable standard of care. In such cases, the person making the misrepresentation may be liable for the injured party's damages, depending on the circumstances of the case.

Fraudulent misrepresentation involves an intentional or reckless use of false statements to cause another to enter into a contract, such as a home sale or business agreement. In such cases, a plaintiff may be able to sue for punitive and/or treble damages (three times the amount of the compensatory or actual damages). In all cases, any representations that turn out to be false will be scrutinized to see if the material facts presented were true and the injured party had a reliance on the truth of the statement when entering into the contract.

Most of the time, claims of misrepresentation must be made within a certain period of time and can be difficult for an injured party to prove. Therefore, it is important for both parties in a contract to make sure that the representations made are true and honest, and that if one party discovers that the other party has made an untrue statement of material fact, the injured party should take legal action without delay.