Negligent misrepresentation occurs when the defendant carelessly makes a representation while having no reasonable basis to believe it to be true. When a defendant who is involved in a transaction in which he or she has monetary interest and provides false information for the guidance of others in a business transaction to theirs, they are subject to liability for financial losses caused by the justifiable reliance of someone who intended to rely upon that information. 

What Constitutes Negligent Misrepresentation?

Below are the essential elements of a claim of negligent representation: 

  • Someone with pecuniary interest in the transaction which he or she is involved in made a false representation as to a past or existing fact. Statements about the future do not count, nor do opinions. 
  • The person making the belief must have no reasonable ground for believing it to be true. For example, if a real estate broker had lived in a house for 15 years before making the sale and they had always found it to be quiet in the past, then their misrepresentation would have been considered an innocent misrepresentation rather than a negligent one. 
  • The representation must have been made with the intent to induce the other party to rely upon it. The misrepresentation must have been made in order to help make the deal.
  • The other party must have believed the misrepresentation and reasonably relied on it in deciding to go ahead with the transaction. 
  • As a result of the reliance on the misrepresentation, the other party suffered damages. This means the buyer must actually be harmed by the final transaction, otherwise there is no liability.

Remedies for Negligent Misrepresentation

Since Misrepresentations are civil offenses, you can only sue for them in civil court. The general remedy in civil court for all types of misrepresentations is that of rescission. Rescission is defined as the unmaking of a contract between parties, thus unwinding a transaction. This means the court will act like the transaction or contract never existed, and everyone would go back to the position in which they were before they entered into the contract. Rescission can be done either by informing the represent or by requesting an order from the court. 

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If you have been affected by unfair trade practices and believe you have a unfair trade practice case, please contact Scarritt Law Group today.