Dinn, Hochman & Potter, LLC

What constitutes negligent misrepresentation?

In an earlier post we introduced the business tort of misrepresentation, and in particular the tort of intentional misrepresentation. This post continues on the subject of misrepresentation with an examination of the tort of negligent misrepresentation.

Misrepresentation in its various forms involves one person giving inaccurate or false information to another, coupled with the justifiable reliance by the other person on that information and harm resulting from it. Negligent misrepresentation may not appear to be as egregious a tort as its intentional counterpart, but it can still result in real monetary injury to another person or business.

Ohio courts have considered the question of what elements the plaintiff must prove to prevail in a cause of action for negligent misrepresentation. These include:

  • the communication of false information from the defendant to the plaintiff;
  • the failure of the defendant to use reasonable care or competence in acquiring or communicating the false information;
  • the plaintiff's justifiable reliance on that information; and
  • harm to the plaintiff as a result of such justifiable reliance.

What constitutes "justifiable" reliance on the part of the plaintiff occurs when the representation itself does not appear on its face to be unreasonable, and if under the circumstances no evident reason exists to doubt its truthfulness.

Negligent misrepresentation can occur in a number of business settings, from purchase and sale agreements to more complex transactions such as mergers and acquisitions. To minimize the risk of inadvertently making a negligent misrepresentation, or to determine your possible remedy if someone else has made such a misrepresentation to you in your business, it is advisable to consult with a business attorney who is familiar with and experienced in Ohio commercial business matters.  

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