Consider property damages ensuing from power outage Motivates victims to get insurance to protect themselves If businesses cant get insurance, businesses go out of business Criticism for limiting recovery of pure economic loss Rule favors tortfeasors over victims No deterring effect Lots of uninsured innocent parties will suffer pure economic damages from a foreseeable negligent event, without any relief Victims will not be made whole Departs from traditional tort principles of foreseeability and proximate cause Fraud and Negligent Misrepresentation Misrepresentation Technically encompasses (3) torts of misrepresentation Fraud or fraudulent misrepresentation (intentional tort) Also as “deceit” Tort you can in almost every context b/c we expect people not to lie Negligent Misrepresentation (negligence in tort) Only shows up in certain cases where we believe you should use reasonable care- generally in advice giving role Innocent Misrepresentation- functional equivalent to breach of contract, strict liability Minority recognize this Very few permissible situations All misrepresentations are based on false statements Statement = written, oral, or conduct Fraudulent Misrepresentation vs. Negligent Misrepresentation Fraudulent Negligent Statement False statement of material fact OR failure False statement of material fact to disclose a material fact (Omission) Culpability Scienter: intent to deceive Negligence- duty, breach, causation, harm Liability (Who can Intended for to rely or had reason to Intended to supply information π be expect (highly foreseeable)- constructive to or limited group- actual π) π knowledge; more potential liability knowledge required (other approaches exist R2T §552) Reliance Justifiable reliance (subjective reliance only Reasonable reliance (subjective required) (1) don’t have to investigate even and objective reliance) if reasonable P would (2) if preyed on -Must act as reasonable would ∆ π your vulnerability, still justifiable even if Contributory Negligence is not reasonable available as a defense Contributory Negligence not defense, but can still challenge the reasonableness as π’s part of their claim for a prima facie case
Consider property damages ensuing from power outage Motivates victims to get insurance to protect themselves If businesses cant get insurance, businesses go out of business Criticism for limiting recovery of pure economic loss Rule favors tortfeasors over victims No deterring effect Lots of uninsured innocent parties will suffer pure economic damages from a foreseeable negligent event, without any relief Victims will not be made whole Departs from traditional tort principles of foreseeability and proximate cause Fraud and Negligent Misrepresentation Misrepresentation Technically encompasses (3) torts of misrepresentation Fraud or fraudulent misrepresentation (intentional tort) Also as “deceit” Tort you can in almost every context b/c we expect people not to lie Negligent Misrepresentation (negligence in tort) Only shows up in certain cases where we believe you should use reasonable care- generally in advice giving role Innocent Misrepresentation- functional equivalent to breach of contract, strict liability Minority recognize this Very few permissible situations All misrepresentations are based on false statements Statement = written, oral, or conduct Fraudulent Misrepresentation vs. Negligent Misrepresentation Fraudulent Negligent Statement False statement of material fact OR failure to disclose a material fact (Omission) False statement of material fact Culpability Scienter: intent to deceive Negligence- duty, breach, causation, harm Liability (Who can be π) Intended for π to rely or had reason to expect (highly foreseeable)- constructive knowledge; more potential liability Intended to supply information to π or limited group- actual knowledge required (other approaches exist R2T §552) Reliance Justifiable reliance (subjective reliance only required) (1) don’t have to investigate even if reasonable P would (2) if ∆ preyed on your vulnerability, still justifiable even if not reasonable Contributory Negligence not defense, but can still challenge the π’s reasonableness as part of their claim for a prima facie case Reasonable reliance (subjective and objective reliance) -Must act as reasonable π would Contributory Negligence is available as a defense