I. Negligent Misrepresentation

• Library: South Carolina Business Torts (SCBar) (2021 Ed.)

I. NEGLIGENT MISREPRESENTATION

1. Restatement Standard

The standard of liability for this cause of action is set forth in section 552 of the Restatement, which provides as follows:

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.

Except as stated in Subsection (3), the liability stated in Subsection (1) is limited to loss suffered (a) by the person or one of a limited group of persons for whose benefit and guidance he intends to supply the information or knows that the recipient intends to supply it; and (b) through reliance upon it in a transaction that he intends the information to influence or knows that the recipient so intends or in a substantially similar transaction.

The liability of one who is under a public duty to give the information extends to loss suffered by any of the class of persons for whose benefit the duty is created, in any of the transactions in which it is intended to protect them.⁴⁰³

2. Elements

In order to state a claim for negligent misrepresentation under South Carolina law, a plaintiff must allege and prove the following elements:

(1) the defendant made a false representation to the plaintiff;

(2) the defendant had a pecuniary interest in making the statement;

(3) the defendant owed a duty of care to see that he communicated truthful information to the plaintiff;

(4) the defendant breached that duty by failing to exercise due care;

(5) the plaintiff justifiably relied on the representation; and

(6) the plaintiff suffered a pecuniary loss as the proximate result of his reliance upon the representation.⁴⁰⁴

Under this standard, "[t]here is no liability for casual statements, representations as to matters of law, or matters which plaintiff could ascertain on his own in the exercise of due diligence."⁴⁰⁵

3. Practical Observations

a. Pecuniary Interest and Duty of Care. Proof that a particular statement was made in the course of a defendant's "business, profession or employment" is sufficient to establish a duty and satisfy the threshold issue of whether the defendant has a pecuniary interest.⁴⁰⁶

The defendant's duty of care in negligent...