MISREPRESENTATION - S. 18 CAA misrepresentation is defined as an unambiguous, false statement of fact which is addressed to the party misled and which materially induces the contract. 3 elementsthat need to be present:(i)the representation must be an unambiguous false statement of fact;(ii)it must be addressed to the party misled; and(iii) it must have materially induced the representee to enter into the contract- Sim Thong Realty Sdn Bhd v. Tey Kim Dar @ Tee Kim  3 MLJ 460.
21S. 18deals only with misrepresentation in three prescribed situations: ‘Misrepresentation’ includes -(a)the positive assertion or statement, of that which is not true, though he believes it to be true(b)any breach of duty which, without an intent to deceive, gives an advantage to the person committing it by misleading another to his prejudice; and(c)causing, however innocently, a party to an agreement to make a mistake as to the substance of the thing which is the subject of the agreement.Example: A tells B ‘The horse is in good shape’. A believes the horse is in good shape. He does not know that the horse just had an accident and is in bad shape.
22The misrepresentation does not reflect the state of mind of the representorat the relevant time. The state of mind of the representor varies according to the circumstances of each case. It may be fraudulent, negligent or entirely innocent.An innocent misrepresentationis made where the representor believes his assertion to be true and consequently has no intention of deceiving the representee. The state of mind of the representor is free of deceit and inadvertence. It was not made recklessly careless of whether they were true or false. The word “innocent” is used in law to convey “not knowingly”. A representee who has been induced by an innocentrepresentationmay sue for rescission of the contract, but he may not recover damages.
23He may only rescind the contract if it is still executory and if all parties can be restored to their original position. Where the contract has been executed or performed. the right to rescind could be lost. The representee had elected to affirm the agreement. Such remedy is not available so far as dealings in land are concerned where the conveyance has been properly executed by both vendor and purchaser. - Sim Thong Realty Sdn Bhd v. Teh Kim Dar @ Tee Kim See also: Abdul Razak bin Datuk Abu Samah v Shah Alam Properties Sdn Bhd  3 CLJ 231. CA; Admiral Cove Development Sdn Bhd v. Balakrishnan a/l Devaraj & Anor.  9 CLJ 133. Federal Court.
24Misrepresentation and FraudThe basic difference between them is that in fraud the person making the representation does not believe in its truth, whereas in cases of misrepresentation he may believe the representation to be true.