When parties negotiate a contract, they make representations to each other like, “this product is like new” or “this is the best product on the market.” If those representations are false and made recklessly, the person making the representation may have committed a tort known as negligent misrepresentation.
In Texas, a person commits negligent representation if they:
- make a false material representation;
- knew that the representation was false or made it recklessly without any concern for its truth;
- intended to induce another person to act upon the representation; and
- The other person actually and properly relied on the representation and suffered harm.
There are a few important considerations when evaluating a negligent misrepresentation claim. First, the “false material representation” in the first element must refer to a past or existing fact; attempts to predict the future will typically not qualify as a negligent representation. Second, the person making the false statement must not have reasonable grounds to believe the statement is true. A mistake or omission of a fact is usually not considered negligent misrepresentation. Third, the person making the statement must make it with the intent to persuade the other person into doing something, like entering a contract or purchasing a product. Finally, the representation cannot be intentional; that would give rise to a different claim, such as for fraud or fraudulent inducement.
In a successful negligent misrepresentation case, the plaintiff may recover their losses. These losses include the losses associated with the defendant’s negligent misrepresentations. However, the plaintiff may not seek the benefit of an alleged contract created by the defendant’s misrepresentations.