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An insurance applicant carelessly states that their age is 25 without an adequate basis, honestly believing it. They are 27, and the insurer charges a lower premium in reliance on the statement. How…

Question and options

An insurance applicant carelessly states that their age is 25 without an adequate basis, honestly believing it. They are 27, and the insurer charges a lower premium in reliance on the statement. How is the statement classified under the Indian Contract Act, 1872?

  1. Misrepresentation, since there was no intent to deceive

  2. No legal category, since the statement was only an opinion

  3. Mutual mistake as to a fact essential to the agreement

  4. Fraud, since the insurer relied on it to its prejudice

Answer and explanation

Correct answer: A - Misrepresentation, since there was no intent to deceive

Section 18(1) of the Indian Contract Act, 1872 treats as misrepresentation a positive assertion, not warranted by the maker's information, of something false which he believes to be true. Because the applicant honestly believed the statement, there is no intent to deceive, so it is not fraud under Section 17.

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