The paper "Business Law Issues" is a great example of an assignment on the law. “ I consider that it follows and that it should now be regarded as settled that if someone possessing special skill undertakes, quite irrespective of contract, to apply that skill for the assistance of another person who relies upon such skill, a duty of care will arise. The fact that the service is to be given by means of or by the instrumentality of words can make no difference. Furthermore, if in a sphere in which a person is so placed that others could reasonably rely upon his judgment or his skill or upon his ability to make careful inquiry, a person takes it upon himself to give information or advice to, or allows his information or advice to be passed on to, another person who, as he knows or should know, will place reliance upon it, then a duty of care will arise” (Gillies, 2004). Application of the law Misrepresentation is defined in contract law as untrue statements made by a party to another for purposes of influencing their judgment, and there are several forms of this (Turner, 2008).
Negligent misrepresentation on the other hand is defined as “ a statement made without reasonable grounds for belief in its truth” (Turner, 2008). A precedent case of, Hedley Byrne & Co Ltd v Heller & Partners Ltd which is relevant to our case scenario regards a negligent misrepresentation in which the court in setting current precedent regarding this form of misrepresentation that leads to economic loss for the first time provided for “ liability for pure economic loss not arising from a contractual relationship, introducing the idea of assumption of responsibility” (Turner, 2008). The implication of this premise in our case scenario is that the law will ordinarily allow Kosmo to sue Gerry for acts that amount to negligent misrepresentation, despite the fact that Kosmo and Gerry were not directly in any form of the contractual relationship.
Indeed, in their summation during the ruling, the supreme court judges also stated inter alia that “ ..a person takes it upon himself to give information or advice to, or allows his information or advice to be passed on to, another person who, as he knows or should know, will place reliance upon it, then a duty of care will arise” (Gillies, 2004). This effectively means that such persons, where negligent misrepresentation has been found to be the case, are also by default liable to economic losses suffered by third parties as a result of their bad advice.
So far, what this means is that on this basis alone Kosmo does indeed have a strong case against Gerry if he was to sue him. However, as in many matters of law, this is not the only thing to consider in this case.
Gillies, P. 2004. Business Law. Federation Press: Annandale.
Lillywhite, B. 2011. The Extent of Res Ipsa Loquitur. The Modern Law Review,
22(1), pp. 82-83.
Turner, C. 2008. Australian Commercial Law, 27th edn. Thomson Reuters. Victoria: