Negligent Misstatement

Negligent Misstatement

Tort of negligence can be applied without any consent or contract1, which is different from contract law which is based on the terms of contract. Only if the university has the duty to reasonable care to Brad, while the university breaches the duty and causes damages foreseeably, Brad can sue the university for negligence.

1.Damage

Brad suffer pure economic damage rather than financial loss resulted from personal injury or property damage2. Brad paid $60,000 for enrolling the course in order to become a qualified CPA and get high salary eventually, but he did not make it after completing the course, so the tuition fee could be one of the damages. Additionally, the course is full-time, which means Brad gave up the salary he could have earned from the his previous job as $200,000 per year. So Brad suffered $460,000 in total pure economic damage in this two-year course.  

2.Duty of care

It is important to determine firstly whether there is an duty of care owed by the university to Brad. In general, The defendant will owe the plaintiff a duty of care if, at the time of making the statement, the defendant knows that3:

a) The statement will be communicated to the plaintiff;

b) The plaintiff will be very likely to rely on the statements in deciding whether to enter

into a transaction; and

c) There is a risk that the plaintiff will suffer financial loss if the statement is incorrect.

The advertisement post by the university conveyed the information about the course to the public and Brad is also included into the public, and the university can reasonably expect that people like Brad who want to become a qualified CPA would choose to enroll the course based on the promise made by the university in the advertisement. Meanwhile, the risk existed if the course was not qualified, Brad would suffer financial loss. So, the university owed the duty of care to Brad.

3.Breach of Duty

The duty that is owed will be breached if 4

a) The information or statement that is provided turns out to be inadequate; and

b) A reasonable person in the position of defendant would not have provided such a statement or information under the circumstances.

The university breach the duty of care, because the advertisement conveyed a message that once completing the course, people would become a qualified CPA, while, in April 2014, the qualification application was rejected, which proved the promise made by the university in the advertisement could not be realized, so the statement in the advertisement turned out to be adequate4. And a reasonable person in the university’s position would post the advertisement with more clear statement about the CPA qualification application based on the risk of being rejected by the CPA authority. Even though the note in the advertisement showed the application was pending, the advertisement still conveyed a message to the public that the information about that the people can be guaranteed CPA qualification once completing the course which seemed that the coursed had been accredited by CPA. Additionally, a reasonable person would tell students the result of accreditation application of CPA, when the application was rejected in April 2014. So the advertisement could be a negligent misstatement.