What is negligent misrepresentation? Making a Claim

Negligent misrepresentation is a significant concept in contract law, involving false statements made carelessly or without reasonable grounds for believing them to be true, which subsequently cause harm to another party. Unlike fraudulent misrepresentation, which requires intent to deceive, negligent misrepresentation arises from a lack of due diligence or failure to verify the accuracy of information before presenting it as fact.

In essence, negligent misrepresentation occurs when one party makes a statement that they honestly believe to be true, but without taking reasonable care to ensure its accuracy. The misled party, relying on this incorrect information, suffers financial loss or other damages as a result.

Expert Commercial Law offers access to a specialised panel of experienced solicitors proficient in handling negligent misrepresentation cases. For further details and expert legal advice from our legal professionals, please contact us today.

Types of misrepresentation

In the context of misrepresentation in contract law, there are generally three main types of misrepresentation: innocent misrepresentation, negligent misrepresentation, and fraudulent misrepresentation.

In cases of innocent misrepresentation, the party making the false statement has belief in its truth and has no intent to deceive. However, this innocent misrepresentation can still give rise to remedies for the party who suffered a loss as a result of relying on the false statement.

Negligent misrepresentation, on the other hand, occurs when a party makes a false statement without exercising reasonable care to ensure its accuracy. It involves a failure to meet a duty of care owed to the other party. When such a false statement induces the other party to enter into a contract and causes them to suffer a loss, the injured party may have a claim for misrepresentation.

Fraudulent misrepresentation encompasses deceitful actions or statements that lead another party to enter into the contract or agreement under false pretences. At its core, fraudulent misrepresentation occurs when one party knowingly makes a false statement with the intent to deceive another, resulting in the latter party’s reliance on the misleading information to their detriment. 

Making a claim for negligent misrepresentation

A claim for misrepresentation can be made under the Misrepresentation Act 1967. Making a claim for negligent misrepresentation in England and Wales involves several key steps. It is essential to adhere to the legal framework established by common law and statutes. Below is an overview of the process:

Identifying negligent misrepresentation:

The claimant must establish that a false statement of fact was made by another party, either innocently or with a lack of reasonable care (negligence). This false statement must have induced the claimant to enter into a contract or transaction.

Elements of negligence:

Demonstrating negligence involves showing that the party making the false statement owed a duty of care to the claimant. They also need to prove that they breached that duty by failing to exercise reasonable care in verifying the accuracy of the statement.

Reliance and causation:

Proving that the claimant reasonably relied on the false statement when entering into the contract and that this reliance was a direct cause of their financial loss or harm.

Notification and attempted resolution:

It is advisable for the claimant to notify the party responsible for the misrepresentation about the issue and the resulting loss. This may prompt discussions or negotiations for a resolution without resorting to legal action.

Letter of Claim:

If a resolution cannot be reached, the claimant may send a formal “Letter of Claim” to the other party, outlining the details of the negligent misrepresentation, the losses suffered, and the intention to pursue legal action.

Alternative Dispute Resolution (ADR):

Before initiating court proceedings, parties are encouraged to consider Alternative Dispute Resolution methods. These may include mediation or arbitration to resolve the dispute more amicably and cost-effectively.

Issuing court proceedings:

If ADR is unsuccessful, the claimant may proceed to issue court proceedings. The claim form should outline the particulars of the claim. This should include the alleged negligent misrepresentation, the losses incurred, and the remedy sought.

Defendant’s response:

The defendant has an opportunity to respond to the claim, either admitting or denying liability. If they admit liability, the parties may proceed to negotiate the amount of compensation. If liability is denied, the court may be involved in determining the outcome. 

Remedies for negligent misrepresentation

Remedies for negligent misrepresentation often include rescinding the contract, putting the innocent party in a position as if the contract never existed. Alternatively, the injured party may seek damages if they suffered loss due to the false representation. In some cases, a claim for misrepresentation may lead to legal action for breach of contract.

It is crucial for individuals facing issues of misrepresentation to consult legal professionals experienced in contract law as they can determine the right remedy for misrepresentation. The complexities of proving a false statement and establishing the resulting loss require a thorough understanding of the nuances involved in misrepresentation claims. 

How Expert Commercial Law can assist

If you are wondering ‘what is negligent misrepresentation?’, please contact us today and we will put you into contact with a solicitor who can assist with your case. Our team takes the stress out of finding you a solicitor to assist on your negligent misrepresentation matter. Our panel of commercial solicitors has a strong track record of successful outcomes.

All of the solicitors on our panel have the experience and expertise required to take on your case. Each solicitor is vetted before being allowed onto our panel, and we only select the best in the business. All of our solicitor firms are authorised and regulated by the Solicitors Regulation Authority (SRA).

Our commercial litigation lawyers also help with other commercial claims, such as director disputes and CCJ removal.

Please note we are not a law firm of solicitors; however, we maintain a panel of trusted and regulated legal experts. If you contact us in relation to a case, we will pass your case on to a panel firm in return for a fee from our panel firms. We will never charge you for passing on your case to a panel firm.