Misstatements as Something Other than Tort/Negligence
The first claim to be investigated is that, contrary to assumptions made during the course of 50 years of case law and scholarship, negligent misstatements do not actually fall within, or belong to, either the law of torts or the law of negligence.
This type of claim has been given prominence by corrective justice/ rights theorists and it should be acknowledged from the outset that the present writer is unpersuaded by this type of scholarship. Suffice to say that writers like Cane and Keating have, between them, convincingly undermined claims that corÂrective justice and will-theory-inspired concepts of rights are fundamental to the law of torts.[1110] The rights conception of tort is not analytically useful for a number of reasons, including its eviscerated conception of the person and neglect of relaÂtionships with others,[1111] reliance upon the fallacy that tort deals only with extant rights,[1112] the failure to explain where rights come from,[1113] the preferment of coherÂence over other values in the operation of the tort system of redress,[1114] and inconÂsistency with the judicial norm-making role. The rights theorists would deny the function of the law of torts as a guide to future conduct and would deny the capacÂity of judges to influence the scope and application of tort rules in executing that function.[1115] Much like a birthday sparkler, it would seem that the rights fad will eventually exhaust itself. However, in the meantime, one cannot deny the interestÂing nature of claims made by corrective justice/rights theorists in areas like that of misstatements causative of financial loss. Their claims are interesting at least in so far as we come to know the law better when we can contrast it with what it is not.In Rediscovering the Law of Negligence ([1116]RLN,),ri Allan Beever argues that relÂevant principles regarding the duty of care in negligence can be distilled from ‘five great cases' and that the principles so discerned are reflective of corrective justice.[1117] Corrective justice is said to explain the various elements of negligence, including the ‘neighbour principle', and the inter-relation between them.[1118] His conception of corrective justice is constructed upon a base of correlative rights and duties.
Thus, ‘a wrong-sufferor has a claim in corrective justice only if the wrongdoer violated her right, and she can claim from the wrongdoer only if h er right was violated by that particular wrongdoer.[1119] A key point is that Beever believes that ‘rights are logically prior to wrongs and hence the rights base of negligence law is conceptually prior to the remainder of that law’.[1120]In chapter 8 of RLN, Beever considers the law relating to ‘ Negligent MisrepreÂsentation and Assumption of Responsibility’ and argues that misstatement cases are not properly considered part of the law of negligence. One reason for this is the negative argument that there is no protectable right to financial well-being— no ‘esoteric right not to be injured in reliance on negligently made statements’. [1121] Another is a positive argument about the reasoning adopted in cases like Hedley Byrne v Heller. Beever explains:
In the relevant cases... the primary right in the claimant violated by the defendant must have been created by the defendant’s making of the statement. Unlike rights to the person and to property, therefore, the right to rely on a statement is derived from the defendant: it is a right somehow given to the claimant by the defendant. Now, at common law, rights are given to another only if it is reasonable to interpret, on an objective test, the giver as intending to furnish those rights. In other words, there must have been an assumption of responsibility.[1122]
The basis of the defendant’s potential liability is that he consented to something that placed him under an obligation that he did not then meet.[1123]
Beever concludes that the misstatement cases have been wrongly classified as negÂligence cases. They belong, rather, to what he terms the ‘law of consents’.[1124] Having drawn parallels throughout the chapter between the nature of the obligation creÂated in misstatement cases and those in contract law, Beever also concludes that ‘the distinction between tort and contract is fundamentally unstable’.[1125]
Beever’s overall thesis has been the subject of prior comment by the present writer.[1126] Problems include his unsuccessful invocation of a correlative schema of rights and duties and his failure to accept the normative dimension of judicial law making.[1127] With respect to his argument about the law relating to misstateÂments being part of the ‘law of consents’ rather than negligence, this can be given short shrift.
There is no generally accepted category of law called the ‘law of conÂsents’. Indeed, the cases to which Beever refers, many of which are discussed in this chapter, are pleaded in negligence, are analysed as involving each of the elements of negligence and are subject to all the limitations of the tort of negligence. To ascribe them to the law of negligence is, however, inconvenient for Beever because of his claim that duty of care cases should be determined on the basis of foreÂseeability alone.[1128] While this might work (after a fashion) in cases concerning physical damage, Beever realises that it will not be sufficient to determine liability in misstatement cases. What remains, then, is Beever's claim about the centrality of the ‘assumption of responsibility' concept, which gives rise to a genuine issue of interpretation. This is a claim he makes in common with a number of other theorists and which will require full investigation later in this chapter.Another writer who is of the opinion that the law of misstatements does not belong to the law of negligence is Mark Gergen. In an article titled ‘Negligent MisrepresenÂtation as Contract',[1129] he takes a Beever-style argument one step further. He argues that the law on misstatements is best seen as a ‘contractual claim akin to promissory estoppel'.[1130] Obligations arise on the basis of ‘ invited reliance'.[1131] The reason for disÂtinguishing the remedy for breach from the general tort of negligence is as follows:
Under the concept of invited reliance, liability for carelessly supplying false or misleading information that harms another requires a special sort of communicative relationship between the information supplier and the victim. By contrast, the modern negligence principle is a rule of prima facie liability for harm carelessly caused.[1132]
Gergen also argues that misstatements must be seen as falling within the law of contract because obligations in that branch of law are voluntarily assumed (which is not the case in the law of torts)[1133] and that contract is the appropriate venue for claims in respect of financial losses (unlike negligence, which is focused upon ‘problems of accidental physical harm' ).[1134] Gergen's major claim can be rejected for exactly the same reasons as we rejected Beever's claim that misstatements do not fall within the ordinary law of negligence. However, this chapter will need to examine the premises that underlie Gergen's theory of misstatement law. The arguÂment will be that they do not reflect the bulk of the English case law and that misÂstatements are best analysed according to the orthodox test for duty—the Caparo Industries plc v Dickman[1135] three-stage test.
III.
More on the topic Misstatements as Something Other than Tort/Negligence:
- Barker Kit, Grantham Ross. The Law of Misstatements: 50 Years on from Hedley Byrne v Heller. Hart Publishing,2015. — 410 p., 2015
- Misstatements as a Unique Head of Negligence
- Introduction
- Limiting Factors in the Law of Negligent Misstatement
- Introduction
- Conclusion
- The Advantages of a Tort Claim
- Assumption of Responsibility and the Law of Negligence
- TheSpeechesin Hedley Byrne
- Tension and Controversy