Table of Contents
In Short
- Negligent misstatement occurs when a false statement is made carelessly, causing financial loss to a party that relies on it.
- You don’t need to be in a contract with the defendant to make a claim, but you must prove duty of care and causation.
- Defences include denying duty of care or reasonable reliance.
Tips for Businesses
Always be cautious when giving advice or making statements that others may rely on. Consider disclaimers to limit your liability and seek legal advice to prevent disputes over negligent misstatements.
When you run a business, you have contact with many people. For example, your customers, businesses you purchase from, those you contract out to, and your employees. Taking care of how you interact with others, including what you say, is essential. Equally, you hope others will care about their relations with you and what they say. Unfortunately, however, business relationships can go wrong, and there is the possibility that you will enter into a commercial dispute. Although a business disagreement can be, for example, over a breach of a business contract, the parties can enter into litigation because of a negligent statement one of you makes, causing the other economic loss. This article will, therefore, explain negligent misstatement in terms of legal liability and defences.
What is Negligent Misstatement?
A negligent statement is a false statement made carelessly in writing or orally. If you rely on a negligent statement or advice, you can bring a negligence action against that person or business where they owe you a duty of care. This action is a negligent misstatement claim and comes under the umbrella of common law tort.
You do not need to be in a contractual relationship with the defendant to make a negligent misrepresentation claim. However, if you are in a contractual relationship, you could make a negligent misrepresentation claim. This is usually preferable to a negligent misstatement claim.
When you make a negligent misstatement claim, you can recover financial losses from your reliance on the statement. The amount of economic loss you may be able to recover is limited to the loss you suffered as a result of the negligent misstatement, which at the time was reasonably foreseeable.
This guide outlines how to resolve commercial disputes.
What Do I Need to Prove for a Negligent Misstatement Claim?
As a claimant trying to win a negligent misstatement claim, you need to prove the following on balance of probabilities that:
- the defendant owed you a duty of care;
- there was a breach of that duty of care;
- as a result of the statement, you suffered harm, which is causation;
- the harm was reasonably foreseeable; and
- making the person liable for their negligent statement is just and fair.
The duty of care element is often the most difficult of the above to prove. It is also essential to understand that when establishing a breach of the duty of care, the standard of care required in the situation is a question of law.
Continue reading this article below the formCall 0808 196 8584 for urgent assistance.
Otherwise, complete this form and we will contact you within one business day.
What are the Defences for Negligent Misstatement?
Various defences can be used by a defendant accused of negligent misstatement. Some of these focus on asserting that the claimant needs to have all the elements required to prove negligent misstatement.
For example that:
- there was no duty of care;
- it was not the statement that caused the harm as the harm would have occurred anyway, or
- the claimant did not rely on the statement.
It is also possible to use the defence that it was not reasonable for the claimant to rely on the statement in the given circumstances.
A further defence to negligent misstatement is that when the statement was provided the defendant excluded the assumption of responsibility. This is when they exclude or limit their liability. This limits or excludes the reliance a person can have on the advice.
This means that the claimant is not owed a duty of care. For example, by:
- giving notice that any statement made is under these circumstances; or
- giving a disclaimer stating that when giving the statement, the person had no responsibility for it.
Key Takeaways
If a false statement is made carelessly, it may be considered negligent. If you rely on it, you may have a claim for negligent misstatement. This is part of the law of tort and means that you could claim your financial losses from the statement. To prove a claim of negligent misstatement, you need to prove several factors, including that the person owed you a duty of care and that you suffered harm due to the written statement. When you claim a negative misstatement, the defendant may use a defence to prevent you from proving it. For example, they may say there was no duty of care or that you did not rely on their statement. Another defence is that they claim they excluded the assumption of responsibility, such as by a disclaimer.
If you need help understanding negligent misstatement, our experienced disputes and litigation solicitors can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
A negligent misstatement happens when someone carelessly makes a false statement, causing financial loss to another person who relied on it. You can claim even without a contract, as long as the person owed you a duty of care.
You can defend by proving no duty of care existed, the claimant did not rely on the statement, or the harm would have happened anyway. You can also use a disclaimer to exclude responsibility.
We appreciate your feedback – your submission has been successfully received.
