Scope of Liability for Negligent Misstatement by Professionals - Assignment Example

Scope of Liability for Negligent Misstatement Test of Negligence Generally, for a claim of negligence to stand, one has to prove three elements. These elements are: That there was a duty of care owed to the claimant by the defendant, That the duty of care owed was breached, That the breach caused reasonably foreseeable damage borne by the claimant These grounds have been applied for cases involving personal injury. But when it comes to negligent misstatement by professionals, this control test may not be appropriate, more so when it comes to the element of reasonable foreseeability.

In Caparo Industries Plc V Dickman, Lord Oliver foresaw a situation whereby a professional would be open to a limitless scope of liability, if the test of reasonable foreseeability alone was applied, (Katter 2003, P. 1). . A duty of care will only arise where the advice giver, expressly or impliedly, guaranteed the information user that he will exercise due care when making the required statement. The person giving advice must be in possession of special skills and judgement on which the claimant relied on.

This will not suffice if according to the circumstances, it was unreasonable for the claimant to rely on such a statement. The information giver, at the time of giving the statement, must have known or reasonably expected to know, that the claimant was going to rely on the statement given. In the case of Hedley Byrne & Co. Ltd V Heller & Partners Ltd, the plaintiffs who were an advertising agency had suffered economic losses due to the negligent statement of the defendant bank about the financial standing of one of its clients.

It was held that where there exists a special relationship and an individual gives inaccurate statements where it was reasonably foreseeable that that information was to be acted on, liability could arise for losses sustained from that reliance. When it comes to the requirement of special relationship, liability restricted only to reasonable circumstances. This prevents a situation whereby multiple claims could be made against the same defendant who has made a negligent statement that turns out to affect many people.

In order to restrict such multiple claims arising from the same misstatement, the court laid out the essential of special relationship in the case of Caparo Industries V Dickman (1990). These essential are: That the maker of the statement knew that it would be communicated to plaintiff, whether named or unnamed. That the advice given was in relation to a particular transaction or one that is ascertainable. That the maker of the statement