When to Sue for Negligent Misrepresentation

Negligent misrepresentation is a tort. This tort may be asserted against a person who supplies false or incorrect information in the course of his business, profession, or employment, or in a transaction in which he has a monetary interest.

A person claiming negligent misrepresentation (the “plain­tiff”) must prove all of the following:

1. the person being sued (the “defendant”) either provided the plaintiff with false or incorrect information, or omitted or failed to disclose material information
2. the defendant intended that the plaintiff rely on the informa­tion provided and provided it for that purpose
3. the defendant failed to exercise reasonable care or competence in obtaining or communicating the information
4. the plaintiff relied on the information
5. the plaintiff’s reliance was justified
6. as a result, the plaintiff was damaged. There is no requirement that the plaintiff prove the defendant was lying, so long as the information provided by the defendant was false.

The Arizona Supreme Court has said that “liability for negligent misrepresentation is narrow in scope because it is premised on the reasonable expectations of a foreseeable user of information supplied in connection with commercial trans­actions.” (The author has seen the tort of negligent misrepre­sentation asserted against real estate agents and business pro­moters, who supplied false information in their transactions.)

A person who has been injured or damaged because he justifiably relied on incorrect information in a commercial transaction is entitled to reasonable compensation. As with other torts, the amount of compensation generally will be determined by a jury or judge.

A lawsuit for negligent misrepresentation must be filed within two years from when the cause of action accrues, or it will be barred by the statute of limitations.