Misstatements as a Unique Head of Negligence

The next claim to be investigated in this chapter is one which does not dispute the fact that, broadly speaking, the law of negligent misstatements falls within the tort of negligence.

In The Idea of Private Law, Ernest Weinrib establishes a framework of correc­tive justice built upon a Kantian conception of rights and correlative duties and a focus not upon actual losses but upon normative losses. Normative losses are indicative of a shortfall in what the claimant s hould have ‘ according to the norm governing the parties' interaction'.^[1136] ‘ The plaintiff realizes a normative loss when the infringed right is within the scope of a duty violated; liability causes the repa­ration of this infringement'. ^[1137] The relevant norm is the ‘norm against negligent injuring'.^[1138] The law of torts is said to protect rights in the sense that a tort involves a violation of the right of another, conceived of as a violation of the ‘freedom inherent in self-determining agency'. ^[1139] A right is a ‘power to treat something as subject to one's will as a consequence of an antecedent connection that one's will has established with the thing in question'^[1140]—whether that thing be one's body or one's property.^[1141] One has a right to private property, for example, and a negligent interference with that right is an infringement of self-determining agency (viz, the right to do as one wants with his or her property) and grounds a cause of action in tort.

Although the plaintiff has no right against the world for economic loss as such, in situ­ations of justified detrimental reliance the plaintiff recovers for economic loss because of the special relationship that arose between the parties. The relationship is special in that, given the circumstances in which the misrepresentation took place, the defendant can reasonably be regarded as having invited the plaintiff to rely on it for a particular transaction or kind of transaction, and thus as having voluntarily assumed responsibility for the loss that results from the transaction. After leading the plaintiff reasonably to rely on the representation... the defendant cannot fairly disclaim responsibility for the consequences. [T]o the extent of the plaintiff's detrimental reliance, tort law views the plaintiff's pre-existing economic situation as an entitlement that runs against the defendant. The basis of the entitlement—the invitation to rely for a particular (kind of) purpose—also defines the scope of the duty correlative to it.^[1143]

A number of objections can be taken to Weinrib's conception, which cannot be fully explored in the course of this chapter. First, one might object to the under­lying premise—that the law of torts is an instantiation of will-theory and that all that matters is the individual's capacity for purposiveness. Cane points to tort as being a two-sided relation that is concerned not merely with the defendant's capacity for purposiveness, but also with the claimant's losses.^[1144] This view, it is submitted, is much closer to reality. Second, the law of torts is concerned with the manner in which failures in care impact upon real lives, bodies, property and prospects.

Reasoning very similar to Weinrib's (although not grounded in a conception of corrective justice) is adopted by Robert Stevens in Torts and Rights. Stevens argues for a rights model of the law of torts in which, again, it is necessary to be able to identify a pre-existing right prior to actions alleged to infringe it.^[1149] ‘The law of torts', says Stevens, ‘is concerned with the secondary obligations generated by the infringement of primary rights'.^[1150] He argues that the ‘common law's starting point is that the infliction of economic loss does not per se infringe any right of the claimant'.^[1151] Stevens thus explains the result in Caparo Industries plc v Dickman^[1152] as follows:

We do not have rights good against the rest of the world not to be given incorrect infor­mation, so as to avoid making losses from share dealing. We merely have a liberty to buy shares. Unless there was a reason arising from a relationship between the claimants and defendant why the claimants had a right against the defendant, for example a contract, no claim was possible.^[1153]

But Stevens recognises the assumption of responsibility as providing a legitimate basis for creating a right,^[1154] in a manner not dissimilar to Weinrib.

Aside from the usual problems with rights theories of the law of torts, there are a number of shortcoming in Stevens' account of misstatements cases. One set of problems, highlighted by Murphy, relates to the attempt to justify a free-standing head of liability by selective analogy with equity and bailment^[1157]—while ignoring the fact that contract law refuses redress for gratuitous undertakings.^[1158] Although an explanation for this analogy might be possible,^[1159] Stevens does not provide suf­ficient reasons for adopting it. Another problem of his account, to be dealt with below, relates to the Williams case, which Stevens finds so compelling. This chapter argues that the House of Lords' use of the assumption of responsibility concept was highly contentious, ignored the established test for duty in misstatement cases, and was used as a device in order to obtain a determination of no liability.

IV.