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To what extent do the rules relating to negligent mis-statement help to protect the person giving information from unlimited liability?

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Introduction

'A person who gives information to others runs the risk of unlimited liability, as information is likely to be spread among a large group of people, even if it was originally only given to one person' To what extent do the rules relating to negligent mis-statement help to protect the person giving information from unlimited liability? Sarah Freeman. A negligent mis-statement is defined in Law as a statement, which can be written or oral, which was issued carelessly by the defendant and relied upon by the claimant, and as a result of this information or advice the claimant suffered a loss. The initial position on negligent mis-statement was laid down in the case of Candler v Crane, Christmas and Co (1951). In this case a firm of accountants did some work for a client, they understood that their information would be considered by a third party and as a result of relying on this information the third party suffered financial loss. The Court of Appeal held that the accountant's responsibility was only to their client. This judgement protects the person giving information from unlimited liability as only the person with which he entered a contract with can sue him, even though he knows a third party may suffer loss from relying on the information. ...read more.

Middle

In Henderson v Merrett Syndicates the House of Lords held that there could be liability whether or not there was contractual relationship between the parties if the claimant shows reliance on the advice. The case of Chaudry v Prabhaker (1988) is also similar to this as it shows that the defendant can be liable even if there is no contractual agreement. This case was an exemption to the guideline that a social relationship would not normally give rise to a duty of care. The second criteria for establishing if a duty of care exists is a voluntary assumption of responsibility meaning that the defendant has chosen to give advice or information and has allowed it to be passed on to a third party when they had the choice to not give the advice/information or emphasised it should not be relied upon. Therefore the use of a disclaimer will usually mean the defendant has not assumed responsibility. Under this criterion it must also be shown that the claimant was a member of a class to which the defendant knew the information would be passed on to, this was shown in the case of Goodwill v British Pregnancy Advisory Service. ...read more.

Conclusion

can sue the defendant for negligent mis-statement and so if the information is spread among a large group of people this does not mean that they can all sue. However, several cases have broadened the approach, for example Esso Petroleum v Mardon showed that it was sufficient for the person who gave the advice to be in the course of that business and Henderson v Merrett Syndicates Ltd demonstrated that the existence of a contract, such as a disclaimer doesn't prevent a special relationship existing. The case of Law Society V KPMG showed that although the advice cannot be used for one purpose if it was given for another it could simultaneously be given for another purpose. It is also shown that a duty of care can exist where there is no reliance of the claimant on the defendant's advice or information when concerning wills, and this was shown in the case of White V Jones. In conclusion a person who gives information is protected from unlimited liability as even if the information is conveyed to a large group of people the rules relating to negligent mis-statement prevents a large body of people being able to claim as it restricts those who can claim to a certain group of people. ...read more.

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