Negligent misstatement

• What is negligent misstatement?


  Negligent misstatement occurs when C receives negligent advice from D and loses money as a result.
• What must be proven to recover pure economic loss due to negligent misstatement?


  C must prove that PEL resulted from D's negligent misstatement and that a special relationship existed.
• What was the outcome of Hedley Byrne v Heller and Partners (1964)?


  D was not liable for pure economic loss due to a disclaimer of liability.
• What is required to establish a 'special relationship' in negligent misstatement cases?


  A special relationship can be established through five essential factors.
• What are the five essential factors of a special relationship?


  1. D must be a specialist.
  2. C must be a known user.
  3. D must know the purpose of the advice.
  4. D assumed responsibility for the advice.
  5. It was reasonable for C to rely on the information.
• What does it mean for D to be a 'specialist' in the context of negligent misstatement?


  D must be considered an expert in the area of advice given, which can be shown through qualifications or knowledge.
• What was the outcome of Lennon v MPC (2004)?


  D was allowed to claim for economic loss because he was considered knowledgeable.
• What was the significance of Chaudhry v Prabhaker (1989)?


  D was liable for the advice given on purchasing a car due to having more knowledge than C.
• What does it mean for D to have a 'known user' in negligent misstatement cases?


  D must know who will use the advice, even if they do not know the person specifically.
• What was the outcome of Law Society v KPMG (2001)?


  C was entitled to claim because KPMG knew who would use the reports.
• What was the outcome of Goodwill v BPAS (1996)?


  C was not entitled to recovery of damages because D did not owe a duty of care to an unknown user.
• What must D know to establish a 'known purpose' in negligent misstatement cases?


  D must know the reason for the advice given, typically communicated by C.
• What was the outcome of Caparo Industries v Dickman (1990)?


  D was not liable because the report was published to the public without knowledge of who would use it.
• What does it mean for D to assume responsibility for the advice given?


  D must accept responsibility for the advice, and disclaimers may be ignored if unreasonable.
• What was the outcome of Patchett v SPATA (2009)?


  C was unable to recover PEL due to D's disclaimer of liability.
• What was the significance of the Chaudhry v Prabhaker (1989) case regarding reasonable reliance?


  C was able to recover damages because D knew C would rely on the advice given.
• How do courts determine reasonable reliance on advice?


  The courts consider the circumstances and whether it was reasonable for the claimant to act on the advice.
• What was the outcome of Smith v Eric Bush (1990)?


  C was entitled to claim because it was reasonable to rely on the survey despite the disclaimer.
• What is the Unfair Contract Terms Act 1977 (UCTA) in relation to disclaimers?


  • UCTA allows courts to ignore unreasonable disclaimers in contracts.
  • Protects consumers from unfair terms.