Negligence Law of Torts

Negligence Misstatements in the Law of Torts

This is a concept of contract law indicative of carelessly made facts by one party to another with the effect of luring that party into a contract. It could also be falsehood or false promises made by a trader while having no reasonable basis to believe it to be true, regarding the nature of products intended for sale are a classic example of negligence misstatement. It allows damages to the plaintiff where there is neither collateral contract nor fraud.[footnoteRef:1] [1: Witting, C. (2005). Liability for Negligent Misstatements. Oxford: Oxford University Press.]

Negligent misrepresentation was first seen in the case of Hedley Byrne v Heller [1964] A.C 465.[footnoteRef:2] This case was centered on economic loss that resulted from a negligent misstatement. Hedley Byrne in this case claimed that the information regarding Easipower Ltd., given to it by Heller and Partners Ltd., was given negligently and was misleading. This came after Hedley Byrne had requested for a financial background check on Easipower Ltd., who had given them a contract worth £17,000. Heller and Partners gave a positive reply that led Hedley Byrne into an ill-fated contract resulting to loss of the total amount. Heller on the other hand argued that there was no duty of care owed concerning the statements and liability was excluded. In this case, the notion that one party owes the other duty of care for comments made in reliance were rejected before the ruling was made rendering contract law as the only remedy.[footnoteRef:3] [2: Hedley Byrne & Co Ltd. v Heller & Partners Ltd. . (1964). AC 465.] [3: Elliott, C., & Quinn, F. (2007). Tort Law. London: Longman.]

In the case of Richard Ellis (WA) Pty Ltd. v Mullins Investments Pty Ltd. (in liq).[footnoteRef:4] The defendant Richard Ellis a real estate agent for Australia place had leased out two offices on the 6th and 7th floor for the plaintiff Mullins Investments Pty Ltd. Mullins in a bid to consolidate the office was offered alternative space on the 6th floor that was currently occupied by Citibank. The Mullins clarified to Mr. Swale the defendant's representative that they would not make any commitment until they re-let the original office. After seeking Swale's advice on the possibility of re-occupying the original office space, the Mullins received the advice through a letter. In the letter, Swale suggested that the Mullins proceed with the commitment on the Citibank space and that it would take about 2 months, they were settled in the Citibank premises; this would allow them time to secure a tenant for the original space. In the letter Swale believed this would give the Mullins enough time to lease the 6th floor even though it might have taken somewhat longer for the 7th[footnoteRef:5]. The "somewhat longer for the seventh" was regarded as additional month and there was no indication that this constituted negligence in the circumstances. Mullins alerted Swale that they would begin negotiations on sub-leasing the Citibank space. Because of the market crash, no tenants were found. Mullins later sued Richard Ellis; Mullins claimed that Richard was negligent by not amending their advice with respect to leasability of the original offices after the stock market crash. (Richard Ellis (W.A.) Pty Ltd. v Mullins Investments Pty Ltd. (in liq), 1995). At the trial, the judge ruled in favor of Mullins, on the basis that the advice had 'a continuing effect and operation'[footnoteRef:6]. Later the Supreme Court disagreed with the ruling citing lack of reliance by Mullins on the advice at the time of the formal offer. The Court claimed that was no reliance on the representation.[footnoteRef:7] [4: Richard Ellis (W.A.) Pty Ltd. v Mullins Investments Pty Ltd. (in liq). (1995). Aust Torts Report.] [5: Ibid 81-309, 62,090. ] [6: ] [7: Richard Ellis (W.A.) Pty Ltd. v Mullins Investments Pty Ltd. (1995). Aust Torts Reports 81-309, 62,084. ]