February 4, 2023
We have mentioned the phrase “negligent misrepresentation” in several articles so far. We have yet to discuss negligent misrepresentation in an article specifically dedicated to the subject.
That probably leaves some of you wondering “what is negligent misrepresentation?”, either because you landed here by Googling the term or because you read one of our prior articles and want more specific information.
Negligent misrepresentation is a civil cause of action, not criminal. It falls into the broad category of what are known as “torts”, a word so odd that Microsoft Word dictation does not pick it up. It is an old English term for civil wrongs, as opposed to public wrongs which normally lead to criminal consequences. If you are the victim of a tort, you have to sue the wrongdoer to recover damages or other remedies. You must plead one or more of the different types of torts.
But this is not a general article about torts. It is about negligent misrepresentation, which is just one kind of tort. As with any other tort though, if you feel you have suffered damages or other losses due to negligent misrepresentation, you may wish to sue.
A negligent misrepresentation is something that gives you a right pursue for damages. It is not the same as a fraudulent misrepresentation, as we discussed in one of those earlier articles. Negligence is a much lower threshold to meet than fraud. The essential difference is between carelessness and an intentional act.
As we discussed in the fraud article, key strategic decisions must be made at the outset of your claim. Not only must you decide whether you can prove fraud, you must decide whether it is practical to allege negligent misrepresentation, because though it is often pleaded it is seldom proven.
As also noted in the fraud article, any claim must be pled within strict time limits. Simply starting an action does not preserve claims not pled.
Which of fraud or negligent misrepresentation should you plead? Or, despite the costs risks of an unsuccessful fraud claim, do you sue for both?
Or do you sue in contract?
Carelessness or negligence is much easier to prove than fraud. For many decades the courts in Britain, where we take our legal traditions from, resisted allowing people to sue for negligent misrepresentation. Canada and Ontario followed suit. The objection was that claims in tort generally had to relate to some sort of physical damage whether to a person or to property. So-called economic torts developed more slowly and more recently and are still limited in scope.
Negligent misrepresentation was one of the earlier examples of an economic tort being recognized by the courts. It did not take long for the courts to state a clear test for negligent misrepresentation.
To recover for negligent misrepresentation, you must show that:
(1) There was a duty of care based on a “special relationship” between the representor (the person you want to sue) and the representee (you);
(2) The representation in question was untrue, inaccurate, or misleading;
(3) The representor acted negligently in making said misrepresentation;
(4) You relied, in a reasonable manner, on said negligent misrepresentation; and
(5) The reliance was detrimental to you in the sense that damages resulted.
Since negligent misrepresentation often causes harm by inducing you to enter into an unwise contract, there are many cases about the effect of subsequent contracts. Entire agreement clauses in those contracts will try, and often succeed, in preventing a claim based on those representations. But they do not always succeed.
In a limited number of specific fact situations, courts have found “concurrent liability” in both negligent misrepresentation and contract.
If you feel that you have been misled by somebody not because they committed fraud but because they committed a careless error in what they told you, you may have a claim.
The complexity of the relationship between negligent misrepresentation and contract makes it necessary to obtain expert legal advice at the outset. Negligent misrepresentation is not a cause of action for amateurs or even for those lawyers that we refer to as “occasional barristers”.
The litigation team at Weilers LLP has the experience with complex litigation and the thoughtfulness to give you sound advice from the beginning of your case. If you want advice tailored for your specific case, Weilers LLP may be the lawyers for you.