Summary
- A negligent misstatement is a false statement made carelessly in writing or orally, and where a duty of care exists, the person who relied on it can bring a claim in tort to recover reasonably foreseeable financial losses, even without a contractual relationship with the defendant.
- To succeed in a negligent misstatement claim, the claimant must prove on the balance of probabilities that the defendant owed a duty of care, breached that duty, caused foreseeable harm through the statement, and that imposing liability is just and fair.
- Defendants can defend against negligent misstatement claims by arguing there was no duty of care, the claimant did not rely on the statement, the harm would have occurred regardless, or that responsibility was excluded through a disclaimer or notice at the time the statement was made.
- This article is a guide to negligent misstatement for business owners in England and Wales, explaining the legal elements of a claim, available defences, and the circumstances in which liability may arise.
- LegalVision is a commercial law firm that specialises in advising clients on dispute resolution and commercial litigation matters.
Tips for Businesses
Include clear disclaimers when providing statements, advice, or information to third parties to limit or exclude assumption of responsibility where appropriate. Ensure staff understand the risks of making careless statements in a business context. If you believe you have suffered loss from relying on another party’s negligent statement, seek legal advice promptly to assess whether a duty of care existed.
A careless false statement can cause serious financial harm to another business, and the law provides a remedy through a negligent misstatement claim even where no contract exists. Understanding when liability arises and what defences are available is essential for any business owner.
When you run a business, you interact with many people, including customers, suppliers, contractors, and employees, and taking care in how you communicate – particularly what you say – is essential. While you expect others to exercise the same care, business relationships can go wrong, sometimes leading to commercial disputes arising not only from breaches of contract but also from negligent statements that cause economic loss. This article will 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.
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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.
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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, LegalVision provides ongoing legal support for all businesses through our fixed-fee legal membership. Our experienced disputes and litigation lawyers help businesses manage contracts, employment law, disputes, intellectual property, and more, with unlimited access to specialist lawyers for a fixed monthly fee. To learn more about LegalVision’s legal membership, call 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.
Duty of care is often the hardest element to establish. Courts must also determine the standard of care required in the specific circumstances, which is ultimately a question of law.
You can recover economic losses suffered as a direct result of relying on the negligent statement, limited to losses that were reasonably foreseeable at the time the statement was made.
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