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Negligent Misrepresentation is a type of business tort that frequently occurs in real estate, and contract law. Under real estate and contract law, negligent misrepresentation is a civil wrong, meaning a victim of negligent misrepresentation can sue for money damages.
Elements Similar to Fraudulent Misrepresentation
What is negligent misrepresentation? It typically goes hand-in-hand with fraudulent misrepresentation and shares some of the same basic elements.
Differences in Fraudulent vs. Negligent
Fraudulent Misrepresentation is a Reckless Disregard for Truth
The sole difference between the two is that fraudulent misrepresentation necessitates a reckless disregard for the truth. Negligent representation involves someone committing misrepresentation but may not necessarily know it is false.
If You’re Not Aware Something Is False
But negligent disregard does not require a reasonable ground in assuming something is true.
Negligent misrepresentation is a civil cause of action, a tort, that is very common in business litigation where a representation — a statement — can be proven true or false.
Four Elements Must Be Proven
In cases of Negligent Misrepresentation, the following must have occurred:
- A defendant made a grossly negligent or false statement concerning a very important fact
- A defendant knew or should’ve known that the representation was false,
- A defendant made this misrepresentation to induce a plaintiff to take some type of action on it, and,
- As a result of that misrepresentation, the plaintiff was then (financially) injured by relying on the misrepresentation.
Plaintiff Must Prove 4 Elements
But the key in any claim that negligent misrepresentation occurred requires the ability of a plaintiff to prove those four elements.
The negligent statement must be made with an intent to get another party to rely on the statement as reasons to enter into an agreement. A plaintiff must believe the claims, and it must be a primary reason to enter into a contract.
Example of Negligent Misrepresentation
An example of negligent misrepresentation would be a seller of a rental property in which the seller has never lived or spent any time, yet tells a buyer, “the roof on this home doesn’t leak,” when in actuality, the roof does leak. Not having lived there, the seller doesn’t know the roof leaks.
Put In Writing In Seller’s Disclosure Form
A contract for a home sale includes a Seller’s Disclosure form. In it, the seller has put in writing that the roof has never leaked. The seller may have committed contractual negligent misrepresentation and will be discovered when it rains, if not before, by a good home inspector.
Maybe the buyer relied on the seller’s representation and skipped the home inspection, the proof is still within the leaking roof after a big rain and it’s in writing on the seller’s disclosure.
Florida Law Requires Seller to Disclose Faults to Buyer
Florida law requires a seller of a home to disclose to the buyer all known facts that materially affect the value of the property being sold. It would be a case to be reviewed by an experienced real estate and business litigation attorney as to whether negligent misrepresentation occurred.
Bloodworth Law Founder and CEO, attorney L. Reed Bloodworth is a U.S. News & World Report Best Lawyer in Commercial Litigation. Reed is based in Orlando with an office in Winter Haven, but the firm works with clients across Florida on compelling business and commercial cases.