Negligent misrepresentation - Next Generation Bar Exam

1. Under Ultramares v. Touche, to whom is an accountant liable for negligence in preparing financial statements?

   Only to those in privity or a relationship approaching privity. Ultramares rejected liability to an indeterminate class.

2. An accountant negligently audits a company, and an unknown investor reads the report years later and invests. Under the majority approach, what is the accountant's liability to the investor?

   The accountant is not liable, because the investor was not within the limited class of intended users. Liability does not extend to all foreseeable users.

3. At a party, a stranger casually tells a guest that a stock is a sure thing. The guest invests and loses money. What is the stranger's liability for negligent misrepresentation?

   The stranger is not liable, because the statement was not made in a business or professional context. The tort requires information supplied in the course of business.

4. What is the effect of the plaintiff's comparative fault in negligent misrepresentation?

   It reduces the plaintiff's recovery in comparative fault jurisdictions. Unlike fraud, negligent misrepresentation is subject to comparative fault.

5. Under the majority Restatement approach, to whom is a professional liable for negligent misrepresentation?

   To a limited group of persons the supplier intends or knows will rely on the information. This is narrower than liability to all foreseeable users.

6. What distinguishes negligent from fraudulent misrepresentation?

   Negligent misrepresentation requires only carelessness, not knowledge of falsity. Liability for negligence is limited to a narrower class of plaintiffs.

7. What kind of loss is generally recoverable for negligent misrepresentation?

   Pecuniary loss. Physical harm caused by misrepresentation is governed by ordinary negligence.

8. A surveyor negligently prepares a survey for a seller, knowing the seller will give it to a specific buyer. The buyer relies on it and suffers loss. What is the surveyor's liability?

   The surveyor is liable to the buyer for negligent misrepresentation. The surveyor knew the buyer would rely on the information.

9. In what context must the false information be supplied for negligent misrepresentation?

   In the course of the defendant's business, profession, or a transaction in which it has a pecuniary interest. Casual social statements do not support liability.

10. What are the elements of negligent misrepresentation?

    False information supplied in a business transaction, failure to use reasonable care, justifiable reliance, and pecuniary loss. Liability is limited to economic loss in most jurisdictions.

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