What is the act of misleading another party into entering a contract based on false statements called?

The act of misleading another party into entering a contract based on false statements is known as fraud. Fraud involves intentional deception where one party knowingly makes false statements or omissions to induce another party into a contract. This act undermines the principles of honest communication and trust that are essential in contractual agreements.

In legal terms, fraud can have serious consequences, including the potential for rescission of the contract, damages, and even criminal charges in severe cases. Understanding fraud is crucial for recognizing the importance of accurate representation and accountability in business and legal transactions.

Other related terms such as deception and misrepresentation are often confused with fraud, but they differ significantly. Deception is a broader term that refers to any act of misleading someone, while misrepresentation specifically involves false statements that induce someone into a contract, but may not necessarily include the intent to deceive as required for fraud. Coercion refers to forcing someone to act in a certain way through threats or pressure, which doesn't fit the scenario of misleading based on false statements. Thus, fraud is the precise term that encapsulates the intentional misleading nature of the act.