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Negligent Misstatements and Pure Economic Loss

Have you been in a situation were you have significantly relied on the statement made by another person? Has that person misled you in making that statement to you? Have you lost your money as a result of your reliance on that statement?

Many people may be familiar with the law of negligence. It concerns the failure of a person to take reasonable care for another. You may have come across various examples of this on the news, over the internet or at work. Although the majority of these examples may involve a certain degree of injury, what would the situation be if the loss you suffer is purely monetary? What happens if you suffer a large monetary loss just because another individual has been reckless in the information they provided you? They may have made a mistake or they may have provided a statement that would not have otherwise been provided by any another person working in the same industry. You may have relied on the opinion of a bank regarding the financial viability of a proposed purchaser or you may have relied on the information given by a person who possesses a particular skill.

To prove that you have suffered damage as a result of the negligent misstatement, you must show the following:


Did you rely on the statement? Was the statement made in a serious or merely casual context? Reliance is a key element in establishing a connection between your loss and the statement that was made by the person. To rely on a statement that was made in a non-serious social context will not equate to reliance for the purposes of proving negligent misstatement.

It must have also been reasonable for you to rely on the statement. For example, it may be reasonable for you rely on statements regarding the takings of a particular business made by a real estate agent who regularly engages in the sale of businesses. In contrast, there may be a situation where it would be unreasonable or even unjust to impose liability on a person.

There must be a reasonable assumption that the person who made the statement did have knowledge that the other party was relying on it.

The skill or knowledge of the person

Did you rely on the skill of the person when he or she made the statement? What happens if you relied on a general statement which was made in a business context? Accordingly, there must be a connection between the statement and the area of expertise the person held out to have. If the person has made a statement but he has no expertise in the area then there is no solid basis for you to rely on that statement and thus no negligent misstatement. For example a bank which gives you general advice in relation to the benefit of opening up a new bank account will not be regarded as financial advice requiring a more stringent duty to care as to the correctness of the provided information.

Economic loss

In all cases, you must show that you have suffered a monetary loss as a result of the negligent misstatement made by the person. If there is no damage or loss, then you cannot claim anything. Accordingly, you may have relied on a false statement made by a consultant engineer in relation to particular property. In such a situation, it must be shown that the negligent misstatement of the engineer was a direct cause of your economic loss.

At Berrigan Doube Lawyers, we provide specialist legal advice relating to negligent misstatements. Our firm is known for providing customised legal services to our clients and this has significantly helped them understand their obligations and practically solve their problems and our advice ultimately depends on the particular circumstances of our clients which is the reason why we tailor our legal services to our client’s specific needs and circumstances.

Should you have any questions in relation to this article, please feel free to contact us.