Negligent Misrepresentation: Everything You Need to Know
Negligent misrepresentation occurs when someone makes a statement without regard to the true facts.3 min read
Updated October 20, 2020
Negligent misrepresentation occurs when someone makes a statement without regard to the true facts. For instance, if you tell a person that a stereo system is brand new when it is four-years-old and has been used heavily, then this can be considered negligent misrepresentation. This form of misrepresentation is one of the three legally recognized types of misrepresentation under contract law. Negligent misrepresentation is when a person does not lie directly (saying something knowing it to be untrue), but has made a statement about a subject with no reason to believe it to be fact.
Another example is a real estate agent attempting to sell a home to a buyer who wishes to get a home surrounded by peace and quiet. This prompts the agent to claim the house in question is in a peaceful atmosphere. However, a house next door is undergoing construction, causing heavy noise. With that, the agent made the claim without any reason to believe that the atmosphere surrounding the house was not going to be peaceful.
A judgment can be rendered in an agreement misrepresentation case that involves false statements that convinced one party to enter into the agreement. Statements regarding the future do not matter, neither do opinions or salesman-type phrases. For instance, the following phrases are not an example of agreement misrepresentation:
- This is an excellent car
- This car is the real deal
The statement must be made with an intent to get another party to rely on the statement as reasons to enter into an agreement. Also, the opposite party must believe the claims, and it must be a primary reason to enter into the contract.
Most judges remain hesitant to protect buyers if it is unreasonable to rely on any information that a seller disclosed.
For example, a seller tells a buyer that a car runs a billion miles per hour, and the buyer ends up believing the claim.
The buyer should also rely in part on a misrepresentation when deciding to proceed with the transaction in question. Stemming from the reliance of the misrepresentation, the opposite party suffered a degree of damage, meaning that the buyer must be harmed by the final phase of the transaction, or no liability can be levied.
There are more serious forms of misrepresentations that include:
The two are nearly the same, but there is a fine line between the two. The sole difference is that fraudulent misrepresentation entails a disregard in a reckless capacity in regards to the truth of a subject. On the other hand, negligent disregard does not require a reasonable ground in assuming that something is the truth, so it essentially boils down to a matter of degrees.
For example, if a buyer says that he is lethally allergic to pine wood and asks if a house he wishes to buy is made of pine, the seller should answer truthfully by stating he is unaware if the home is made out of pine wood. If the seller states that the home is not made of pine wood, when in fact it is, this would constitute a reckless disregard of the truth, especially when considering the dire consequences.
Misrepresentation is a civil offense, which means that the case can only be heard in civil court. The criminal counterpart to misrepresentation would be a false pretense. A court acts as if the transaction had never existed in the first place, otherwise known as rescission, and this remedy is usually the most common solution. Negligent misrepresentation is appropriately named because it entails negligence, which is a separate civil offense within itself in regard to the offender. Therefore, it is considered a more serious offense than a simple innocent misrepresentation, and it can have its own remedies under negligence cases.
Fraudulent and negligent misrepresentation constitutes a serious offence, but they can be hard to prove in a court of law. Proving intent or past actions can be a tricky feat because most people can simply tell a judge that they did not know it was a lie when he or she made a fraudulent statement. Each has its own laws in dealing with such an issue, which is why you should contact an attorney to know the best course of action.
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