There are four elements in negligence misrepresentation. The first element of negligence misrepresentation is duty of care. Duty of care is defined as a person must take reasonable care to avoid acts or omissions which he can reasonably foresee are likely to injure his neighbor. In the case Hadley Byrne v Heeler, Hadley, the plaintiff and also a firm, were advertising agents who had provided a substantial amount of advertising on credit for Aspirer.
If Aspirer did not pay for the advertising then Hadley would be responsible for such amounts. Hadley became concerned that Aspirer would not be in a financial position to pay the debt and sought assurances from Superpower’s bank that Aspirer was in a position to pay for the additional advertising which Hadley may give them on credit. The respondents, who were Superpower’s bankers, gave a favorable report of Superpowers financial position, but tabulated that the report was given “without responsibility. On the strength of the report given by the respondents, Hadley placed additional orders on behalf of Aspirer which eventually resulted in a loss of EYE,OHO. Hadley then brought an action against the respondents for damages under the tort of negligence. The court held that in this case, there was an express disclaimer of responsibility and there was therefore be no liability. This case established the doctrine of negligent misrepresentation, but in this case the disclaimer effectively barred the claim.
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The second element of negligence misrepresentation is breach of duty of care. Breach of duty of care is defined as a breach that occurs when the defendant fails to do something which a reasonable person would do or does something which a reasonable man would not do. The third element of negligence misrepresentation is causation. Causation is defined as the relationship of cause and effect of an act or omission and damages alleged in a tort or personal injury action. The fourth and also the last element of negligence misrepresentation are damages.
Damages are defined as compensation given to the plaintiff by the defendant due to a tort of the defendant that causes plaintiffs injury. Next, does the plaintiff have a special relationship with the defendant? In the case Mutual Life and Citizens Assurance suffered loss by investing in another company in reliance upon a MIS-statement as to the financial stability of that company made by one of the insurance company’s officials. The insurance company was not held liable. Shocked test will be tested between the plaintiff and the defendant.
Shocked test is a test in which special relationship can exist even where the advisor does not profess to possess any actual skills or Judgment. Shocked test is conducted to see if there’s any relationship teen the parties and does the defendant has the authority to carry out his duty by giving advice to the plaintiff. The plaintiff put full faith and reliance on the defendant after advice was given by the defendant. The defendant knows that the plaintiff is going to act on the advice after the plaintiff puts reliance on the defendant.
In the case Shocked v Pragmatic City Council, Shocked wanted to purchase property located in the area governed by the council. Shocked solicitor both orally and by a written standard form, asked the council whether the property was the subject of any proposals to widen roads. The council carelessly said there were no proposals when in fact there were such proposals. The value of the property was reduced by the proposal. The plaintiff claimed that they had sustained loss by reason of their reliance on erroneous information supplied to them innocently but negligently by the respondent.
The trial Judge found that the respondent had been careless but that it owed no relevant duty of care to the plaintiff. The court had to decide the circumstances in which a local government body could be held liable for information it supplied to the general public. After the Shocked test, there are retain defenses that the defendant will be able to raise which is contributory negligence, voluntary assumption risk and world economic downturn. Contributory negligence is defined as the plaintiff also is liable to be blamed for the cause of a certain action.
Voluntary assumption risk is defined as the plaintiff has volunteered to accept the risk of a certain action, whether or not it will cause economic loss. World economic downturn is defined as a period in which global economic slows down and might sometimes cause recession. Lastly, there are two remedies for the plaintiff which is damages or termination of a contract. Damages will be given to plaintiff if the defendant is liable for the cause of the action, or in other case, termination of a contract.
Case 1: The United States of America’s Case Case Summary: A case in the United States of America which was up to Supreme Court of Florida is Tiara Condominium Association, Inc. V Marsh & McClellan Companies, Inc. The facts of this case are set forth in the Eleventh Circuit Court of Appeals’ opinion in Tiara Condominium Association, Inc. V Marsh & McClellan Corporation, Inc. Tiara Condominium Association (Tiara) retained Marsh & McClellan (Marsh) as its insurance broker.
Marsh’s responsibility was to secure condominium insurance usage. Marsh secured windstorm coverage through Citizens Property Insurance Corporation (Citizens), which issued a policy that contained a loss limit in an amount close to $50 million. In September 2004, Tiara’s condominium sustained significant damage caused by hurricane Frances which affected South Carolina, Florida and many more states and hurricane Jeanne which affected Haiti, Florida, Bahamas and many more states. Tiara began the process of loss remediation.
After being assured be entitled to almost $100 million rather than coverage in the aggregate, which would e half of the amount. Tiara proceeded with more expensive remediation efforts. However, when Tiara sought payment from the Citizens, Citizens claimed that the loss limit was $50 million in total, not per occurrence. Eventually, Tiara and Citizens settled for approximately $89 million, but that amount was less than the more than $100 million spent by Tiara. In October 2007, Tiara filed suit against Marsh.
The appeals court concluded that summary Judgment was proper as to the breach of contract, negligent misrepresentation, and breach of implied covenant of good faith ND fair dealing claims. However, the appeals court did not affirm the summary judgment granted by the trial court on the negligence and breach of fiduciary duty claims, which were based on Tiara’s allegations that March was either negligent or breached its fiduciary duty by failing to advise Tiara of its complete insurance needs and by failing to advise Tiara of its belief that Tiara was undesired.
As to these two claims, the appeals court certified a question to this Court to determine whether the economic loss rule prohibits recovery, or whether an insurance broker falls within he professional services exception that would allot Tiara to proceed with the claims. Elements of Negligence Misrepresentation: The first element of negligence misrepresentation is duty of care. The first thing to determine is whether the defendant, Marsh owes the plaintiff, Tiara a duty of care of the economic loss. The answer to Tiara v Marsh case is a yes, the defendant owes a duty of care of the economic loss to the client.
The second element of negligence misrepresentation is breach of duty of care. There is a breach of duty of care because the defendant is in charge of securing the condominium’s insurance usage. The defendant breach the duty of care in which Marsh did not secure the condominium’s insurance usage properly. Marsh had misrepresented the fact from Citizens Property Insurance Corporation in which they issued a policy that contained a loss limit in an amount close to $50,000 million in total, not per occurrence.
Marsh thought that it was $50,000 million per occurrence, not in aggregate. When Tiara Condominium suffered damages due to hurricane Frances and hurricane Jeanne, Marsh had misrepresented the fact to Tiara that they would be entitled to $50,000 per occurrence but was informed by Citizens Property Insurance Corporation that Tiara could only entitled to $50,000 in aggregate not per occurrence, but the fact that Tiara already spent more than $100,000 on remediation of the condominium.
In this case, Marsh breached the duty of care as an insurance broker by receiving and telling the wrong information to the plaintiff, Tiara, who needs to bear with the loss. The third element of negligence misrepresentation is causation. There is a clear causation of economic loss of the plaintiff caused by the defendant because the defendant failed to take necessary precautions to secure the condominium’s insurance usage. The defendant, Marsh should have taken enough precautions and information from Citizens Property Insurance Corporation about the damages entitled if there’s a loss.
Marsh should have a contract signed with the Citizens Property Insurance Corporation with clear details about the compensation entitled to prevent from misrepresentation or fraud from happening. In this case, do the between the defendant and the plaintiff, their relationship is between an insurance broker and a client. Next, Shocked test will be tested between the plaintiff and the defendant. In Tiara v Marsh case, is there a business relationship between the arties?
Yes, there’s a business relationship between this parties as Tiara is a client to Marsh and Marsh is responsible for securing Tiara Condominium insurance usage, therefore there is a business relationship between the client and insurance broker. Does the defendant have an authority to give advice? Yes, the defendant, Marsh has an authority of giving advice to the plaintiff as Marsh is an insurance broker to the plaintiff, Tiara. Marsh should give proper advices to Tiara as Tiara is relying on Marsh regarding the insurance usage of their association.
Therefore, Marsh has an authority to give advice. As the advices had already given to the plaintiff, plaintiff has already put full faith and reliance on Marsh Corporation and did not intend that whether or not it will constitute a fraud. The defendant, Marsh knows that the plaintiff is going to act on the advice as they know Tiara already put full faith in their corporation and hence listen to what they said. In this case, there are no defenses like contributory negligence as the plaintiff is not liable to be blamed for the cause of the action.
The plaintiff also did not volunteer to accept the risk for the cause of this action as the plaintiff did not intend something to happen and that the defendant provided the wrong information. There is no world economic downturn for the cause of this action as the defendant provided the wrong information to plaintiff in which the plaintiff needs to bear with the loss, there is nothing to do with world economic downturn. Case 2: Malaysia’s Case A case in the Malaysia which was up to High Court of Saba and Karakas in Labial is Degas Bidder Sad Bad v BIMBO Trust Ltd & Dry Aim Giuliani HAJJ Abdul Rasher & Karma Bad Jamie.
The fact is Degas Bidder Sad Bad (plaintiff claimed for a sum of REARM,900. O and damages suffered as a result of the BIMBO Trust Ltd & Dry Aim Giuliani HAJJ Abdul Rasher & Karma Bad Jamie (defendants) negligent and fraudulent misrepresentation in respect of an offshore financing transaction by a company named Bucking Consultant League Sad Bad (Bucking). The defendants deny the claim on the ground that they owed no duty of care to the plaintiff in respect of the alleged representation.
The 1st defendant is a company incorporated under the Labial Trust Companies Act 1990, a subsidiary of Bank Islam Malaysia Bertha and a member of the Bank Islam Group Of Companies. The 2nd and 3rd defendant is the principle officer and the customer relationship manager of the 1st defendant respectively. Through the introduction of Incite Nanjing, a property broker, the plaintiff was introduced to the 2nd and 3rd defendants for the purpose of sourcing a loan for a purchase of a property in IIOP. Plaintiff was given a briefing about the corporate structure by Incite Nanjing.
The purpose of Bucking is that it can source a loan facility of an amount many times more the amount of deposit which the plaintiff is required to be placed with a foreign bank nominated by Bucking. Represented. Firstly the defendants had through the evidence of the 2nd defendant admitted that they had an agreement with Bucking. Secondly, the promotion and acceptance of the package by defendants and plaintiff respectively and the plaintiff had paid a sum of ARMS,900. O for the package. The defendants’ contractual duties of care under contract to the plaintiff.
The defendants here had in fact taken a ‘could care less attitudes’ and ‘seal the deal’ had led to the plaintiff in claiming that defendants had neglected. There are contributory negligence fall under the plaintiff. The plaintiff should checked on Bucking and their products and by ailing to do so, they contributed to the loss. Although the financing package is new to plaintiff hence plaintiff should done investigation on it and plaintiff did not make any effort on the payment made to Bucking which Bucking office is alleged near to plaintiffs office.
Moreover, 1st defendant is vicarious liable for the negligent acts of 2nd and 3rd defendant because 1st and 2nd defendant had done was in the course of their employment. Determine is whether the 1st defendant, BIMBO Trust Ltd owes the plaintiff, Degas Bidder Sad Bad a duty of care of the economic loss. The answer to Degas Bidder v BIMBO Trust case is a yes, the defendant owes a duty of care of the economic loss to the plaintiff. The court held that in this case, it is fair that the defendants owe a duty of care of investigation to the plaintiff.
O from plaintiff for the financing package that was introduced by the defendants. The third element of negligence misrepresentation is causation. There is a clear causation of economic loss by the plaintiff caused be the defendant because the defendant failed to take necessary precautions to secure plaintiffs benefits. Defendants introduced plaintiff the financing package of Bucking but defendants failed to investigate whether Bucking package exists in the market and this has caused plaintiff to ay a heavy price because it was a scam package.
In this case, do the defendant and plaintiff has a special relationship? Yes, there’s a special relationship between the defendant and the plaintiff, their relationship is between an finance advisor and a client. Defendants had promoted the product which has created a contract between the plaintiff and the 1st defendant to assist in procuring trade financing facility. Next, Shocked test will be tested between the plaintiff and the defendant. In Degas Bidder v BIMBO Trust case, is there a business relationship between the parties?
Yes, here’s a business relationship between this parties as Degas Bidder is a client to BIMBO Trust and BIMBO Trust is responsible for securing plaintiffs money or investment, therefore there is a business relationship between the client and finance BIMBO Trust has an authority of giving advice to the plaintiff as BIMBO Trust is a finance advisor to the plaintiff, Degas Bidder. BIMBO Trust should give proper advices to Degas Bidder as Degas Bidder is relying on BIMBO Trust regarding the money that plaintiff investment in the financing package. Therefore, BIMBO Trust has an authority to give advice.
As the advices had already given to the plaintiff, plaintiff has already put full faith in BIMBO Trust and did not intend that whether it will constitute a fraud and a scam. The defendant, BIMBO Trust knows that the plaintiff is going to act on the advice as they know Degas Bidder already put full faith in their corporation and hence listen to what they said. There is a defense in this case which is contributory negligence. The plaintiff is responsible for checking on Bucking and their products and by failing to do so, they will be contributed in suffering from economic loss.
Therefore, he plaintiff is liable to be blamed for the consequences of not carrying out his duty by checking properly. Conclusion: In conclusion, for Tiara Condominium Association, Inc. V Marsh & McClellan Companies, Inc. Case, the court held that the economic loss rule was limited to use only in the products liability context. The court overturned years of decision that had expanded the rule to bar tort actions to recover solely economic damages between parties in contractual priority, where there was no independent act or omission to support the tort claim, other than breach of contract.