LAW P2 TORT (Negligent misstatement)

Question 1

What is a negligent misstatement?

Answer 1

A negligent misstatement is a representation of fact which is carelessly made, and is relied on by another party to their disadvantage

Question 2

When will economic loss be able to impose liability?

Answer 2

Usually, it is not possible to recover compensation for pure economic loss. However, if the pure economic loss was caused by a negligent statement, liability may be imposed.

Question 3

Which is the case that substantiated negligent misstatement?

Answer 3

Negligent misstatement was substantiated in Hedley Byrne v Heller, that a defendant owes a duty of care to a claimant in the making of a statement, only if there is a special relationship between them.

If a special relationship is proven, then a duty of care exists and hence the defendant will be liable.

Question 4

What are the four points set out in Hedley Byrne v Heller?

Answer 4

• The defendant who made the statement possesses some special skill relating to the statement
• The defendant knows that it is highly likely that the claimant will rely on the statement – Chaudry v Prabhakar
• The claimant does rely on the statement, thereby incurring financial loss
• It was reasonable for the claimant to rely on the statement

Question 5

What are the 4 cases for the 4 main points?

Answer 5

• Hedley Byrne v Heller, a duty of care exists when a defendant provides advice or information in a professional capacity
• Chaudhry v Prabhakar, liability can arise in negligent misstatement when advice is given in a context implying responsibility
• Smith v bush, a duty of care can arise in misstatements made in a professional context
• JEB Fasteners v Marks Blooms, If the claimant would have incurred the financial loss regardless of the defendants statement, then the defendant won’t be liable