Final answer:
The defense that can apply to Internet contracts involving misrepresentation of identity is mental disability affecting buyer or seller competence.
Step-by-step explanation:
The defense that can apply to Internet contracts involving misrepresentation of identity is mental disability affecting buyer or seller competence. When a person enters into a contract online and misrepresents their identity due to a mental disability that affects their competence, the contract may be challenged as being invalid. This defense is based on the principle that a person with a mental disability may lack the capacity to understand the terms of the contract and make informed decisions.