What constitutes misrepresentation in contract law?

• A. A true statement that occurs after the contract is formed
• B. A false statement of fact made by one party or their agent that induces the other party to enter into the contract
• C. A warranty that the property is free from encumbrances
• D. An advertisement that is merely puffery and not relied on by the other party

Answer: (B)

Misrepresentation in contract law is a false statement of fact made by one party or their agent that induces the other party to enter into the contract. The key elements are that it must be a factual claim (not just an opinion or a statement of law) and it must be relied on to form the agreement.

In this question, the description that fits best is a false factual statement by one party or their agent that leads the other party to sign the contract. The other options don’t fit: a true statement after the contract is formed isn’t misrepresentation; a warranty is a contractual promise within the deal rather than a separate misrepresentation; and puffery in advertising is opinion or exaggeration not relied upon as a factual basis for entering the contract.