What is an essential element of misrepresentation in contracts?

An essential element of misrepresentation in contracts is that there must be inducement to agree based on false information. This means that one party has made a false statement or representation that the other party relied upon when deciding to enter into the contract. For a misrepresentation to be legally significant, the injured party must show that they were misled and that this misinformation directly influenced their decision to agree to the contract terms.

Having accurate statements or full recognition of all potential risks might be important in the context of informed decision-making, but they do not constitute misrepresentation themselves. Misrepresentation specifically pertains to false information that leads one party to make a decision they otherwise might not have made. Therefore, the focus is on the misleading nature of the information and its role in coaxing the other party into the agreement.