A person whose advice is sought and given is potentially liable in negligent misstatement if the advice is given negligently and the recipient suffers reasonably foreseeable loss as a result of relying on the advice.

Select the INCORRECT statement below.

This liability may be avoided by:

Question

A person whose advice is sought and given is potentially liable in negligent misstatement if the advice is given negligently and the recipient suffers reasonably foreseeable loss as a result of relying on the advice.

Select the INCORRECT statement below.

This liability may be avoided by:

BlackTom AI · Accepted Answer

Negligent misstatement liability requires (1) a special relationship where the adviser has assumed responsibility for the accuracy of the information or advice, (2) reasonable foreseeability that the recipient would rely on the advice, and (3) actual and reasonable reliance by the recipient causing foreseeable loss (see Hedley Byrne principles).

Step-by-step reasoning:
1. Establish the adviser’s duty: A duty arises where the adviser possesses special skill or expertise and either expressly or implicitly assumes responsibility for the correctness of the advice given to a specific recipient.
2. Foreseeability and reliance: It must be foreseeable that the recipient would act upon the statement and the recipient must in fact have relied on it.
3. Breach and causation: The adviser must have been negligent in forming or communicating the advice, and that negligence must be the cause of the recipient’s loss.
4. Defenses/avoidance: Typical ways to avoid liability include (a) showing there was no assumption of responsibility by the adviser (no special relationship), (b) proving the recipient did not rely on the advice or that reliance was unreasonable, (c) relying on a clear and effective disclaimer or exclusion/limitation clause, or (d) demonstrating that the adviser’s statement was not negligent. These defenses negate elements of the cause of action (duty, reliance, breach) or validly exclude liability under contract/statute.

Why “proving that the recipient was contributorily negligent” is incorrect:
- Contributorily negligent conduct by the recipient does not generally “avoid” the adviser’s liability. Rather, contributory negligence (where available under domestic law) operates to reduce the amount of recoverable damages proportionately for the claimant’s own fault; it does not nullify the adviser’s liability in principle. In other words, it is not a means of preventing liability from arising — at best it may apportion loss after liability is established.
- Therefore, proving contributory negligence is not a method to avoid liability altogether, unlike the defenses listed above which negate duty, reliance, or breach or validly disclaim responsibility.

Other typical answer choices that would be correct avoidance methods (and why they work): disclaimers negate the adviser’s assumption of responsibility; showing no reliance defeats causation; proving no assumption of responsibility negates duty.

Conclusion: The incorrect statement is “proving that the recipient was contributorily negligent,” which matches the provided answer.

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