A party that is attempting to induce another party to enter into a contract has a duty to ensure that reasonable care is taken regarding the accuracy of any representations of fact that may lead to the other party to enter a contract. If such reasonable care to ensure the truth of a statement is not taken, then the wronged party may be the victim of negligent misrepresentation. Negligent misrepresentation can occur when a party makes a careless statement of fact or does not have sufficient reason for believing in that statement’s truth.
Negligence Is Not the Same as Fraud
To establish a case of negligent misrepresentation, a plaintiff must establish elements different than what is required for fraudulent misrepresentation. In Missouri, a plaintiff must establish:
- That information provided by the defendant was supplied in the ordinary course of the defendant’s business or because of a pecuniary interest on his part
- That the defendant failed to exercise reasonable care or competence to determine if the information was correct
- That the information was intentionally provided for the guidance of a limited group
- That the plaintiff suffered a financial loss as a result of reliance on the misrepresentation
Additionally, a defendant will only be liable for negligent misrepresentation if the plaintiff was justified in relying on the information negligently provided.