Negligent Misstatement

Liability for negligent misstatements historically

It has always been the case that where someone’s actions have been negligent and have caused loss then it is possible to claim compensation. Traditionally it was necessary for the claimant to show that there was some pre-existing contractual relationship between him and the defendant but this changed in 1932 when the House of Lords ruled in the case of Donaghue v. Stevenson that everyone has a duty to take care that their actions do not cause harm to anyone at all where it is reasonably foreseeable that the harm might result.

However, the courts have been less willing to accept that where someone gives negligent advice or negligently states incorrect facts that there should be any liability for damage caused as a result. Partly this position is based on a recognition that most people are very careless with their words and often open their mouths without thinking, and that to allow people to sue every time someone starts talking about a topic on which they actually know very little would create chaos. In addition, the law already provides two causes of action which can be used to obtain compensation from someone who has caused damage by making false statements:

• The torts of Slander and Libel cover situations where the defendant deliberately & maliciously or recklessly makes statements about someone else which he knows or suspects not to be true and where as a result the claimant’s reputation or good standing is damaged;
• The tort of deceit covers situations in which the defendant makes a statement of fact dishonestly when he knows or reasonably suspects that this is not true and causes damage as a result. This might apply, for example, where the seller of goods makes false claims about their condition in order to close a deal.

However, neither of these torts applies to situations where the defendant has merely been negligent or careless but where there is no malice or belief that the statements are untrue.