What is a Negligent Misstatement

Negligent misstatement refers to the provision of false information by one party to another, where the informant owed a duty of care to the recipient, and the misinformation leads to financial loss.

This tortious liability has evolved to protect parties from the repercussions of carelessly made false statements, bridging the gap between pure economic loss and the traditional tortious duty of care framework.

The Duty of Care and Contractual Relationship

The doctrine of duty of care in negligent misstatement cases was firmly established in the landmark case of Hedley Byrne v Heller.

This case highlighted that a duty of care could exist even in the absence of a contractual relationship, provided there is sufficient proximity between the parties and it is reasonable for one party to rely on the information provided by the other.

However, the duty of care concept transcends the bounds of tort law, intertwining with contractual relationships, especially in professional services where advice is sought and provided.

The intricacies of these relationships highlights the reliance on accurate and careful communication, establishing the foundation for claims of negligent misrepresentation.

Claim for Negligence and Negligent Misrepresentation

A claim for negligence in the context of misstatements necessitates the establishment of several critical elements.

Firstly, there must be a duty of care, as established in Hedley Byrne v Heller. Secondly, there must be a breach of this duty through the provision of a misstatement. Lastly, the claimant must have suffered a loss as a result of relying on the misstatement.

Negligent misrepresentation further solidifies this framework, requiring proof that the misstatement was made carelessly or without reasonable grounds for belief in its truth.

Loss as a Result and Financial Implications

The crux of a claim for negligent misstatement lies in the demonstration of loss as a result of reliance on the incorrect information. This loss is predominantly financial, reflecting the tangible impact of negligence on the claimant’s economic position. The courts meticulously assess the causation link between the negligent misstatement and the financial detriment to ensure justice and accountability.

Hedley Byrne v Heller

Hedley Byrne v Heller remains the cornerstone case in negligent misstatement, establishing the principle that a duty of care can exist independently of a contractual relationship.

This case illustrated the necessity for sufficient proximity between the parties and set a precedent for the extent to which one party could rely on information provided by another.

It highlighted the significance of trust and reliance in professional advisory contexts, shaping subsequent jurisprudence on negligent misstatements.

Sufficient Proximity in Establishing Duty of Care

The concept of sufficient proximity plays a pivotal role in establishing a duty of care in cases of negligent misstatement. It requires a close and direct relationship between the parties, characterised by reliance on one side and the awareness of such reliance on the other.

This proximity ensures that the duty of care is not extended indiscriminately but is confined to situations where the misstatement could foreseeably cause harm to someone who the defendant knew was likely to rely on the information.

Tort of Negligent Misstatement and its Evolution

The tort of negligent misstatement has evolved significantly since Hedley Byrne v Heller, expanding and adapting to the complexities of modern professional and business relationships. This evolution reflects the legal system’s recognition of the diverse contexts in which negligent misstatements can occur, from financial advice to professional consultancy, and the need for legal redress to adapt accordingly.

Negligent Misstatement: Frequently Asked Questions

Can a claim be made if the misinformation was provided informally?

Yes, a claim for negligent misstatement can be made even if the misinformation was provided informally, provided the essential elements are met.

This includes demonstrating a duty of care based on the relationship or context, a breach of this duty through the provision of incorrect information, and resultant financial loss due to reliance on this information.

The context in which the information was provided and the reasonable expectation of reliance are critical factors.

Are there defences available against claims of negligent misstatement?

Yes, there are several defences available against claims of negligent misstatement. These can include proving that there was no duty of care, the information was provided with a disclaimer limiting reliance, the claimant did not actually rely on the misstatement, or that the loss would have occurred regardless of the misstatement. Additionally, the defence may argue that the claimant’s reliance on the information was unreasonable under the circumstances.

How long do you have to make a claim?

The statute of limitations for filing a claim for negligent misstatement is generally six years from the date on which the cause of action accrues. This is outlined in the Limitation Act 1980.

However, it’s important to note that there are circumstances under which this period can be extended, particularly if the claimant was not aware of the facts necessary to bring the claim at the time the damage occurred.

In such cases, the limitation period may start from the “date of knowledge” of the facts. This is subject to a long-stop limitation period of 15 years from the act or omission giving rise to the claim, beyond which a claim cannot be brought, regardless of the claimant’s knowledge.

How Can ARC Costs assist

ARC Costs maintains an extensive legal network of expert commercial litigation solicitors with a track record of success on these types of cases, and we would be happy to pass on your details to assist in your case. 

In addition to introducing you to a solicitor for your negligent misstatement case, we can also assist in the recovery and negotiation of legal costs in commercial cases, whether you are the paying or receiving party.

ARC Costs are highly experienced in advising and assisting with costs issues and disputes in different areas of law. As Costs Draftsman and Costs Lawyers, we can assist in your Commercial Litigation Costs issues.

If a costs award has been made, allowing you to recover costs from your opponent, we can assist with preparing a Bill of Costs on your behalf to ensure maximum recoverability. We can also assist in Costs Negotiations and represent you at detailed assessment proceedings which can determine the amount of costs you may be able to recover.

If you have been ordered to pay costs to your opponent, we can assist in disputing costs which may be sought and which you may deem to be excessive and unreasonable. We can do this by way of preparation of  Points of Dispute and also through negotiations to ensure you will only pay for costs which are reasonably incurred and not exaggerated.

Should you wish to discuss your costs query with us, please contact us on 01204 397302 or via email at info@arccosts.co.uk. Alternatively, you can complete our online query form and we will contact you to discuss your query further. We can provide expert legal advice on costs in our free, no obligation initial consultation.

We may receive payments from third party solicitors on our panel to whom we may refer your claim. We will never charge you for any referrals made to our panel of third parties.