Negligent misrepresentation is a business-specific tort that can be extremely useful, as it provides relief where one party has been misled in a business transaction but does not require the challenging proof of “intent to deceive” that is present in a claim for fraudulent misrepresentation. Put simply, if in the course of a business transaction, the other party tells you something seemingly reasonable but false—and this was a mistake, not intentional fraud on their part—then there is a good chance you have a valid claim for negligent misrepresentation.
The elements of the claim of negligent misrepresentation are set forth in Section 552 of the Restatement (Second) of Torts:
(1) One in the course of his or her business, profession or employment;
(2) Makes a misrepresentation of a material fact, without reasonable care;
(3) For the guidance of others in their business transactions;
(4) With knowledge that his or her representations will be relied upon by the injured party; and
(5) The injured party justifiably relied on the misrepresentation to his or her detriment.
Allen v. Steele, 252 P.3d 476, 482 (Colo. 2011).
Of course, the element that the misrepresentation contains a material fact limits this cause of action to critical misrepresentations, and the “without reasonable care” language invokes the general negligence rubric that flows throughout these elements of duty, breach, causation, and damages.
Negligent misrepresentation can be an important cause of action in business litigation. At Vail Law, we use an open-source, Litigation Checklist approach to develop claims and defenses tailored to each unique situation. Often these include breach of fiduciary duty, fraud, breach of contract, and exotic statutory causes of action. Contact Jeff Vail at (303) 600-3730 or firstname.lastname@example.org to discuss your specific case.