What it means
A misrepresentation is a false statement of fact (not mere opinion or sales 'puffery') made by one party that induces the other to enter the contract. It may be innocent, negligent, or fraudulent depending on the maker's state of mind. The innocent party may rescind the contract and, in some cases, claim damages. In Australia, many misrepresentation claims are now run under the Australian Consumer Law's prohibition on misleading and deceptive conduct, which is often easier to prove because intention does not matter.
How it's used
The seller's claim that the engine had been 'fully reconditioned last year', when it had not, was a misrepresentation that induced the sale.