Restatement (Second) of Contracts · Section § 164
An overview of the circumstances under which a contract may be voidable due to a misrepresentation.
Source: Restatement Restatement (Second) of Contracts § § 164
A contract is voidable by a party if that party's consent was induced by either a fraudulent or a material misrepresentation of fact, unless the other party could not reasonably have known that the representation was false.
This section states that a person can cancel a contract if they were misled by false information provided by the other party. The misrepresentation must be significant enough to influence their decision to agree to the contract.
Comment a emphasizes that the misrepresentation must relate to a factual assertion.
Comment b outlines how the misrepresentation can be either intentional or unintentional.
Illustration 1
Illustration 1: A seller falsely claims that a car has never been in an accident. The buyer, relying on this statement, purchases the car. The buyer can void the contract.
Illustration 2
Illustration 2: A landlord misrepresents the condition of an apartment intentionally leading a tenant to sign a lease, who can later void the contract.
The court applied § 164 to find the contract voidable where a misrepresentation was central to the agreement.
This section underscores the importance of honesty in contractual dealings and provides remedies for those harmed by false statements. Its application can significantly affect the outcome of disputes involving misrepresented facts.