Financial fraud fighting resources for law professionals and the general public. Oregon and Washington. 

Fraud Law Resources for Oregon and Washington





First Page
Free Email Replies
General Information
Fraud Websites
Search & Site Help




Negligent Misrepresentation

    Haberman v WPPSS, 109 Wn.2d 107, 162, 744 P.2d 1032 (1987) described Washington law on negligent misrepresentation. The context is an action against legal and accounting professionals in the WPPSS litigation:

To determine whether a plaintiff has stated a claim for negligent misrepresentation, this court adheres to the standards in the Restatement (Second) of Torts § 552(1), (2) (1977) which provides:

(1) One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.

(2) Except as stated in Subsection (3), [which pertains to the liability of one who is under a public duty to furnish such information] the liability stated in Subsection (1) is limited to loss suffered

(a) by the person or one of a limited group of persons for whose benefit and guidance he intends to supply the information or knows that the recipient intends to supply it; and

(b) through reliance upon it in a transaction that he intends the information to influence or knows that the recipient so intends or in a substantially similar transaction.

Transamerica Title Ins. Co. v. Johnson, 103 Wn.2d 409, 415-16, 693 P.2d 697 (1985); Wilbur v. Western Properties, 22 Wn. App. 458, 463, 589 P.2d 1273 (1979).

In deference to legitimate fears of indeterminate liability to third persons, the Restatement narrows the scope of an action for negligent misrepresentations. Liability does not extend to every person who ultimately becomes aware of the misstatement. Instead, because of the “important social policy of encouraging the flow of commercial information upon which the operation of the economy rests”, the defendant must be “manifestly aware of the use to which the information was to be put and intended to supply it for that purpose.” Restatement (Second) of Torts § 552, comment a (1977). Indeed, “[w]hen there is no intent to deceive but only good faith coupled with negligence, the fault of the maker of the misrepresentation is sufficiently less to justify a narrower responsibility for its consequences.” Restatement (Second) of Torts § 552, comment a. Liability for negligent misrepresentations is thus limited to cases where (1) the defendant has knowledge of the specific injured party’s reliance; or (2) the plaintiff is a member of a group that the defendant seeks to influence; or (3) the defendant has special reason to know that some member of a limited group will rely on the information. See Chubb Group of Ins. v. C.F. Murphy & Assocs., 656 S.W.2d 766 (Mo. Ct. App. 1983). However,

[I]t is not necessary that the maker should have any particular person in mind as the intended, or even the probable, recipient of the information. In other words, it is not required that the person who is to become the plaintiff be identified or known to the defendant as an individual when the information is supplied. It is enough that the maker of the representation intends it to reach and influence either a particular person or persons, known to him, or a group or class of persons, distinct from the much larger class who might reasonably be expected sooner or later to have access to the information and foreseeably to take some action in reliance upon it. It is enough, likewise, that the maker of the representation knows that his recipient intends to transmit the information to a similar person, persons or group. It is sufficient, in other words, insofar as the plaintiff’s identity is concerned, that the maker supplies the information for repetition to a certain group or class of persons and that the plaintiff proves to be one of them, even though the maker never had heard of him by name when the information was given.

Restatement (Second) of Torts § 552, comment h (1977).








Professional Access
Fraud on Investors
Fraud on Seniors
Fraud on Businesses
Fraud by Businesses
Fraud by Fiduciaries
Fraud on Government


Financial fraud fighting resources for Oregon and Washington. For lawyers and the general public.

 Sponsored by