Negligent Misstatement

Question 1

Negligent Misstatement

Answer 1

Similar to general negligence, but usually about what people said or wrote rather than did. Word over action. A DOC may be imposed when pure economic loss results from a negligent misstatement.

Question 2

Negligent Misstatement - case

Answer 2

Hedley Bryne & Co Ltd v Hellars & Patners Ltd

Question 3

To bring a claim

Answer 3

Must be proven that:
1) statement was made negligently
2) there is a special relationship between the parties

Question 4

DOC - special relationship

Answer 4

3 requirements:
1) C relied on d’s advice to their detriment
2) It was reasonable for c to rely on d’s advice
3) D knew or ought to have reasonably known that c was relying on their advice

Question 5

DOC - special relationship - case

Answer 5

Comes from Caparo v Dickman

Question 6

DOC - special relationship - It was reasonable for c to rely on d

Answer 6

This can be proven through:
- A special skill/knowledge held by d
- Special skill/knowledge held by c
- General context where advice is given
- Other general factors

Question 7

DOC - special relationship - It was reasonable for c to rely on d - special skill/knowledge held by d

Answer 7

This can be:
- Having a recognised qualification
- Holding himself out as having some special skill/knowledge
D does not need to be a professional advisor, but does need to be in a better position than c to know the facts.

Question 8

DOC - special relationship - It was reasonable for c to rely on d - special skill/knowledge held by d - case

Answer 8

Esso Petroleum Co Ltd v Mardon - unlikely to be a special relationship if parties are on equal footing

Question 9

DOC - special relationship - It was reasonable for c to rely on d - Special skill/knowledge held by c - cases

Answer 9

Stevenson v Nationwide Building Society - c should have been aware due to profession, action failed
Yianni v Edwin Evans - c was told to do opposite of act, but because of inexperience and imbalance of power, it allowed them to sue

Question 10

DOC - special relationship - It was reasonable for c to rely on d - General context where advice is given

Answer 10

• General rule; no DOC will be owed where advice was given in social situation
• Exception; where d assumed responsability for advice

Question 11

DOC - special relationship - It was reasonable for c to rely on d - General context where advice is given - case

Answer 11

Chaudhry v Prabhakar and Another - d had more knowledge and held himself out as giving considered advice, knowing c would act on it

Question 12

DOC - special relationship - It was reasonable for c to rely on d - Other general factors

Answer 12

• nature of advice
• potential risk to c
• avaliability and practicality of a second opinion

Question 13

DOC - special relationship - D knew or ought to have reasonably known

Answer 13

This requires that:
- the advice is communicated directly to c rather than through a third party medium (newspaper, television, radio)
- d knows (at least in general terms) purpose of which the advice will be used
- d knows c will act on their advice without seeking further advice elsewhere

Question 14

DOC - special relationship - D knew or ought to have reasonably known - cases

Answer 14

Henderson v Merrett - d assumes responsabilities for preforming professional services
Lejonvarn v Burgess - d assumes responsabilities for preforming professional services even as friends doing it for free
White v Jones - solicitor owed duty to beneficiary of a will to achieve practical justice
Spring v Guardian Assurance plc & Others - DOC is owed to subject of the refrence to provide an accurate refrence

Question 15

Disclaimers

Answer 15

Statement informing c that d does not accept responsability for advice being given. This is standard practice when providing a professional refrence.

Question 16

Disclaimers - cases

Answer 16

Hedley Bryne v Heller - disclaimer served as effective defence, d included the words ‘without responsability’ in refrence. HOL found DOC could not be assumed - however this predated the Unfair Contract Terms Act 1997 and the Consumer Rights Act 2015
Smith v Eric S. Bush - any attempt to rely on a disclaimer of responsability in the course of bussiness will be subject to UCTA 1997 and listed factors which should be taken into account when deciding if a disclaimer is reasonable

Question 17

Disclaimers - Factors to be considered

Answer 17

• were the parties of equal bargaining power?
• would it have been reasonably practicable to obtain advice from an alternate source considering cost and time?
• how difficult was the task being undertaken by d?
• what are the practical consequences, taking into account the sums of money at stake and the ability of the parties to bear that loss, particularly in light of insurance?