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Torts • Misrepresentation
TORT#106
Legal Definition
Negligent misrepresentation requires a showing of: (1) a misrepresentation from the defendant in a business or professional capacity; (2) a breach of duty toward a particular plaintiff; (3) causation; (4) justifiable reliance; and (5) damages.
Plain English Explanation
Negligent misrepresentation happens when someone does not directly lie, but has made a statement about a subject with no reason to believe it to be fact. In other words, the person doesn't know for certain that what they are saying is false, but they are not basing what they are saying on any fact that they are aware of.
Note that courts care about whether or not it was reasonable (or "justifiable") for the defendant to believe the statement. For example, "puffery" (or "hype talk") isn't actionable, like "This is the world's best cup of coffee."
Note that courts care about whether or not it was reasonable (or "justifiable") for the defendant to believe the statement. For example, "puffery" (or "hype talk") isn't actionable, like "This is the world's best cup of coffee."
Hypothetical
Hypo 1: Bob sells cars. Sam wants to buy one of Bob's fastest sports cars. Bob recommends a Ferrari. When Sam asks, "How fast can it go?" Bob responds, "As fast as 250 miles per hour!" Sam buys the car, but finds that it can only reach 220 miles per hour. Result: If Bob knew that the Ferrari could not go 250 miles per hour, then he is guilty of fraud; however, if Bob believed in his gut that the Ferrari could go 250 miles per hour, then he is guilty of negligent misrepresentation because Bob had a duty to provide well-researched answers to Sam about the product and not pull information out of thin air.
Hypo 2: Bob sells cars. Sam wants to buy one of Bob's fastest sports cars. Bob recommends a Ferrari. When Sam asks, "How fast can it go?" Bob responds, "Like a million miles per hour!" Sam buys the car, but finds that it can only reach 220 miles per hour. Result: Bob likely knew that the car cannot go a million miles per hour, because that's absurd. Likewise, a court should expect that Sam should realize how absurd the claim is and understand it to be either a joke or just a benign hype statement from Bob trying to make the car sound cool.
Hypo 2: Bob sells cars. Sam wants to buy one of Bob's fastest sports cars. Bob recommends a Ferrari. When Sam asks, "How fast can it go?" Bob responds, "Like a million miles per hour!" Sam buys the car, but finds that it can only reach 220 miles per hour. Result: Bob likely knew that the car cannot go a million miles per hour, because that's absurd. Likewise, a court should expect that Sam should realize how absurd the claim is and understand it to be either a joke or just a benign hype statement from Bob trying to make the car sound cool.