Misrepresentation occurs when one party makes a false statement to persuade another party to enter into a contract. Claims of misrepresentation are civil offenses.
Negligent misrepresentation is the focus of this article. It is one of three types of misrepresentation.
Negligent misrepresentation is a form of deceit where one party makes a representation that isn't directly a lie, but they did not have reasonable grounds to believe it to be true.
Had the party that made the representation known it to be false, and had an intent to deceive, they would be making a much more serious misrepresentation, called fraudulent misrepresentation. Fraudulent misrepresentation is tough to prove in civil court because it's usually tricky to prove a person's intent.
Innocent misrepresentation occurs when one party has reasonable grounds to believe the claims they make, but due to time or unforeseen factors, their claims may not be accurate anymore.
There are several elements to help determine whether or not a representation constitutes negligent misrepresentation:
- The party made a false representation as to past or existing material facts. Opinions do not count.
- The party who made the false representation (even if they honestly thought what they were saying was true) had no real basis or grounds for believing what they stated to be true.
- The party who made the false representation did so with the intent to induce another party into taking an action such as entering a contract.
- The other party must have not only believed the negligent misrepresentation, but they reasonably relied upon it to make their decision.
- By relying on the negligent misrepresentation the other party suffered damages.
One example way to avoid negligent misrepresentation: If a customer asks if there's a specific type of food in one of the dishes, a waiter can ask to be excused to consult with the chef before providing an answer. By doing this they can verify their answers and not have to guess. This type of response works in every type of business from retail and restaurants to real estate and it actually may create a stronger sense of trust between you and your customer. It shows the customer that you're doing your due diligence.
If you were a victim of negligent misrepresentation, consult an experienced attorney about your specific case. They can help explain your options and determine the remedies you might be able to expect.