How to Claim for Negligent Misrepresentation

Negligent misrepresentation is a recognised legal basis for challenging a contract in England and Wales where one party enters an agreement after relying on a false statement of fact made carelessly or without reasonable grounds for believing it to be true. Unlike fraudulent misrepresentation, negligent misrepresentation does not require proof of dishonest intent, but it still allows the misled party to seek compensation and, in some cases, rescission of the contract. This article explains the legal principles, steps to bring a claim, remedies available, procedural aspects, time limits, practical considerations and common questions in an accessible and comprehensive way.

What Is Negligent Misrepresentation?

Negligent misrepresentation arises where a person makes a false statement of existing fact or law that induces another to enter into a contract, and the representor:

• makes the statement without reasonable grounds for believing it to be true, or
• fails to maintain belief in its truth up to the point when the contract is made.

This statutory claim is primarily governed by Section 2(1) of the Misrepresentation Act 1967. Under this provision, if the misrepresentation would have made the representor liable for damages had it been fraudulent, then they will be liable unless they can prove they had reasonable belief in the truth of the statement at all times up to the contract.

Negligent misrepresentation under the Act is distinct from a common law negligent misstatement claim based on the tort of negligence (as in Hedley Byrne v Heller), which requires a “special relationship” between the parties. A statutory claim under the Misrepresentation Act does not require such a relationship, making it more accessible for many contract disputes.

Elements of a Claim

To successfully claim for negligent misrepresentation under the Act, a claimant must show that:

1. A false statement of fact or law was made before the contract was entered into. The statement must be more than mere opinion or future intention.
2. The false statement induced the claimant to enter the contract. The representee must demonstrate reliance on the statement.
3. The representor lacked reasonable grounds for believing the statement was true at the time it was made and up to the point of contracting. The legal burden shifts to the representor to show they did have reasonable belief.
4. The claimant suffered loss resulting from entering the contract on the basis of that statement.

Once these elements are established, the claimant may pursue remedies under the Act.

Remedies for Negligent Misrepresentation

Rescission of the Contract

Rescission is an equitable remedy that seeks to undo the contract, putting both parties back to their pre‑contract position, as far as possible. This remedy is available where it is equitable to do so and the contract has not been affirmed or otherwise made impossible to unwind.

Damages (Compensation)

Under Section 2(1), the claimant can claim damages as if the misrepresentation had been fraudulent. Case law such as Royscot Trust Ltd v Rogerson suggests that where negligent misrepresentation under the Act is established, damages are assessed on the basis of tortious liability (as if for deceit), not on the narrower contractual foreseeability approach. This means recovery for loss can be broader than in simple contract claims.

Damages may include:

• Financial losses directly flowing from the misrepresentation;
• Losses that arise from entering into the contract; and
• Where appropriate, other losses that a court considers directly attributable to the misrepresentation.

In some cases, the court may also award damages in lieu of rescission under Section 2(2) of the Misrepresentation Act 1967, if rescission is not equitable but compensation is still appropriate.

Step‑by‑Step: How to Bring a Statutory Claim

1. Establish the Basis of Your Claim

Carefully review communications, contracts, brochures, presentations and any representations made during negotiations. Identify:

• the specific statement that is alleged to be false;
• evidence that you relied on it in deciding to enter the contract;
• evidence that you suffered loss as a result.

2. Confirm the Claim Meets the Statutory Criteria

Ensure the representation was a statement of fact or law (not opinion or future conduct), and that you entered into the contract largely because of that statement. The burden then shifts to the representor to prove they had reasonable grounds for belief.

3. Gather Supporting Evidence

Compile documentary evidence, such as written statements, emails, minutes of meetings, or marketing materials, which show the representor's statement and your reliance on it. Expert valuations may be necessary to demonstrate financial loss.

4. Pre‑Action Steps

Before formal proceedings, it is good practice to send a Letter Before Action detailing:

• the representation made;
• why it is false;
• how you relied on it;
• the losses suffered; and
• the remedies you seek (rescission and/or damages).

This can sometimes prompt settlement or clarification without litigation.

5. Issue Court Proceedings

If negotiation fails, you can issue a claim in the County Court or High Court depending on the value and complexity. Your claim form and particulars must set out the statutory basis under Section 2(1) of the Misrepresentation Act 1967 and the relief sought.

6. Attend Hearings and Present Evidence

At trial or a summary hearing, the court will consider whether the statutory elements are satisfied. The representor may attempt to prove they had reasonable grounds for belief in the truth of the statement; if unsuccessful, liability arises.

Time Limits

Claims for negligent misrepresentation are primarily governed by the Limitation Act 1980, which imposes a general six‑year limitation period for contract and statutory causes of action, measured from the date of breach or when the representation was made. In some circumstances, discoverability principles may also apply if the claimant did not, and could not reasonably have, discovered the misrepresentation earlier.

Practical Considerations

Interaction with Contractual Clauses

Many commercial agreements contain entire agreement, non‑reliance or exclusion clauses intended to prevent claims based on pre‑contract representations. Under Section 3 of the Misrepresentation Act 1967, terms that exclude or restrict liability for misrepresentation are subject to the reasonableness test in the Unfair Contract Terms Act 1977, and may be held ineffective if unreasonable.

Rescission Barriers

Rescission may be barred if:

• the claimant has affirmed the contract after learning of the misrepresentation;
• third‑party rights have intervened; or
• it is impossible to restore both parties to their original positions.

Burden of Proof

In a claim under Section 2(1) of the Misrepresentation Act, once the claimant establishes a false statement that induced the contract, the burden shifts to the representor to prove they had reasonable grounds to believe and did believe the statement was true up to contracting. This evidential shift makes statutory claims generally more claimant‑friendly than common law negligent misstatement claims.

Common Questions

Do I need proof of negligence?
In a statutory claim under the Misrepresentation Act 1967, you do not have to prove negligence in the tortious sense; it is sufficient that the representor cannot prove reasonable belief in their statement.

Can I claim both rescission and damages?
Yes. Section 2(1) allows claimants to seek both rescission of the contract and damages for loss suffered.

Is negligent misrepresentation the same as negligent misstatement?
No. A claim for negligent misstatement at common law requires a special relationship and focuses on tortious negligence. A claim under the Misrepresentation Act is specifically tied to inducing a contract and avoids the special relationship requirement.

Key Takeaways

A statutory claim for negligent misrepresentation in England and Wales arises where a false pre‑contractual statement induces a contract and the representor cannot prove they had reasonable grounds for believing the statement was true. The Misrepresentation Act 1967 allows claimants to seek rescission of the contract and damages as if the misrepresentation were fraudulent, often making this route more effective than common law alternatives. Key steps include identifying the false statement, gathering evidence of reliance and loss, meeting statutory criteria, and adhering to limitation rules. Careful attention to contractual clauses, evidential burden and rescission barriers will help claimants pursue the claim effectively in courts or tribunals.

James William Steven Parker

James is the founder of UKLegalGuides.com and a former agent at the Ministry of Justice (UK). With a background in processing legal claims, he launched this platform to make the laws of England and Wales accessible to everyone.