AILET 2019 BA LLB Question Paper with answer key for online practice

Question : 78 of 150

Marks: +1, -0

Legal principle : The tort of negligent misstatement is defined as an inaccurate statement made honestly but carelessly usually in the form of advice given by a party with special skill/knowledge to a party that doesn’t possess this skill or knowledge.
Facts : X and Y Co. were advertising agents placing contracts on behalf of a client on credit terms. X and Y Co. would be personally liable should the client default. To protect themselves, the X and Y asked their bankers to obtain a credit reference from K and L, the client’s bankers. The reference (given both orally and then in writing) was given gratis and was favourable, but also contained an exclusion clause to the effect that the information was given ‘without responsibility on the part of this Bank or its officials’. X and Y relied upon this reference and subsequently suffered financial loss when the client went into liquidation. X and Y sued K and L Co. for negligence, claiming that the information was given negligently and was misleading. K and L argued there was no duty of care owed regarding the statements. Decide.

The K and L’s disclaimer was not valid to protect them from liability and X and Y’s claim will not fail.
The X and Y has a duty to obtain the necessary information themselves without relying upon the other party.
It was reasonable for K and L to have known that the information that they had given would likely have been relied upon for entering into a contract of some sort. That would give rise to a special relationship of trust, in which K and L would have to take sufficient care in giving advice to avoid negligence liability. However, on the facts, the disclaimer is sufficient to discharge any duty created by K and L’s actions.
It was reasonable for K and L to have known that the information that they had given would likely have been relied upon for entering into a contract of some sort. That would give rise to a special relationship of trust, in which K and L would have to take sufficient care in giving advice to avoid liability. Hence, liable for negligent misstatement.

Validate

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