Negligent misstatement

Introduction

Claimant may have a claim for his loss due to the negligent misstatement against the D. Generally, the law does not allow claims for pure economic loss caused by D’s negligent act (Spartan Steel), but the House of Lords in Hedley Byrne v Heller held a claimant can sue for negligent misstatement where there is a ‘special relationship’ proved between c and d.

Duty of care - foreseeability

Here, some harm (in the form of economic loss) to someone in the claimant’s position is reasonably foreseeable as a result of defendant’s actions (hedley byrne v heller).

Duty of Care - proximity. A ‘special relationship’ must be proved between C and D

Here, defendant has a special skill or expertise in relation to the statement as … (Esso v Mardon)

D knows or ought to know the purpose for which the advice is sought

Here, defendant knows, or ought to know, the purpose for which advice would be used by the user … (Caparo V Dickman)

D knows that C is highly likely to rely on the statement

The defendant knows, or ought to know the identity of the person/class of persons who will highly likely rely on the statement. In Smith v Bush the surveyors knew that the buyers were highly likely to rely on their survey even though it was prepared for the building society. Here…

D has voluntarily assumed responsibility for the statement

D had voluntarily assumed responsibility for making the statement, which can indicate the existence of a duty of care (Henderson v Merrett)

C has relied on the statement to his detriment

Here, claimant has relied on the statement and suffered a loss to his detriment as… (JEB Fastners v Mark Bloom)

C reasonably relies on the statement

Lastly, claimant must show that it was reasonable to rely on the d’s statement.
Where C has directly asked D for advice and it has been given directly to him, it may be reasonable for C to rely on it (Goodwill v BPAS)
Giving advice in a social situation does not normally give rise to liability (Hedley Byrne) but in Chaudhry v Prabhaker advice given by a friend free of charge did give rise to liability as it was reasonable reliance by the claimant.

Conclude on duty (No application here i think?)

If there is foreseeability of some economic loss and a special relationship has been proved for proximity, a duty will be owed by analogy with an established precedent (Hedley). However, in a novel situation the court will consider if it is fair, just and reasonable to impose a duty.

breach - reasonable man and risk factors

Claimant must prove breach of duty.
Defendant must reach the standard of a reasonable ….(usually a professional - Bolam)
Risk factors

Factual and legal causation

Claimant must prove defendant’s breach caused loss. There is factual causation as ‘but for’…. (Barnett v Chelsea). There is legal causation as the type of damage was reasonably foreseeable and not too remote (the Wagon Mound).

Defences and Damages

[Contributory negligence - it may be possible to argue that C has contributed to his loss by their actions. Damages may be reduced under the Law Reform (Contributory Negligence) Act 1945 (Sayer v Harlow).]

Claimant’s remedy will be damages. The aim of damages is to put claimant back in the position they were in before the tort occurred. Claimant’s claim would be for special damages for the pure economic loss (Hedley Byrne).