05/25/2016

Negligent Misrepresentation as a Cause of Action

The law of the State of Minnesota recognizes Negligent Misrepresentation as a cause of action. Negligent misrepresentation is defined as:

One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information. Hebrink v. Farm Bureau Life Ins. Co., 664 N.W.2d 414, 420 (Minn. Ct. App. 2003)

The most difficult aspect of this cause of action to get comfortable with is the idea of what is "reasonable care or competence." These things change depending on a person's characteristics such as experience and licensure (i.e. licensed attorneys, real estate agents, mortgage originators). The more experience one has, the greater degree of competence one is expected to have. With licensure, the expectation is generally that if you are licensed in a profession, you have adequate competency to overcome a lack of experience.

The safe course of action for professionals is to ask, Am I doing enough? Are there other questions that I need to ask? Is there other information I should try to obtain?

Knowing the elements of negligent misrepresentation is important and the first step to avoiding making one.

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