Injurious Falsehood and Negligent Misstatement — MCQs

All questions with answers and explanations

Read the full set here, or use the practice card above to test yourself one question at a time.

1. What is the primary interest protected by the tort of injurious falsehood, as distinct from defamation?

   • Personal reputation
   • Economic or trade interests (correct answer)
   • Bodily integrity
   • Freedom of movement

   Explanation. Injurious falsehood (trade libel/malicious falsehood) protects a plaintiff's economic or trade interests from false statements, unlike defamation, which protects personal reputation.

2. What did Ratcliffe v Evans (1892) establish regarding proof of damage in injurious falsehood?

   • The plaintiff must always name specific customers lost due to the falsehood
   • General evidence of a decline in trade, reasonably attributable to the falsehood, is sufficient proof of damage (correct answer)
   • No proof of damage is required at all for this tort
   • Only criminal courts can assess damage in such cases

   Explanation. Bowen LJ held that where a false statement injures a class of business generally, general evidence of a decline in trade suffices — the plaintiff need not identify specific customers lost.

3. What are the essentials of the tort of injurious falsehood?

   • A true statement, made carelessly, causing embarrassment
   • A false statement, made maliciously, causing special (pecuniary) damage to the plaintiff's trade or property interests (correct answer)
   • Any statement made about a competitor's product
   • A statement made in the course of judicial proceedings

   Explanation. Injurious falsehood requires a false statement made with malice, causing special (pecuniary) damage to the plaintiff's trade, business, or property interests.

4. In Hedley Byrne & Co Ltd v Heller & Partners Ltd (1964), the House of Lords held that a duty of care for negligent misstatement can arise where

   • The parties have an existing written contract
   • A 'special relationship' exists between the parties, involving reliance the defendant knew or ought to have known about (correct answer)
   • The statement is made in a public forum
   • The defendant is a government official

   Explanation. Hedley Byrne established that liability for negligent misstatement causing pure economic loss can arise where a 'special relationship' of reliance exists, even without any contract between the parties.

5. Why did the claim in Hedley Byrne ultimately fail on the facts, despite the House of Lords recognising the principle of liability?

   • The bank had no special skill or knowledge
   • The bank's express disclaimer 'without responsibility' negated the assumption of responsibility necessary for the duty (correct answer)
   • The claimant did not actually rely on the reference
   • The claim was filed after the limitation period expired

   Explanation. The Lords held that Heller's express disclaimer of responsibility was effective to negate the duty of care, even though the principle of liability for negligent misstatement was established for future cases.

6. How does negligent misstatement differ from the tort of deceit (fraudulent misrepresentation)?

   • Negligent misstatement requires proof of dishonest intent; deceit does not
   • Negligent misstatement does not require proof of dishonest intent — carelessness in a special relationship of reliance is sufficient; deceit requires fraudulent intent (correct answer)
   • They are identical torts with different names
   • Negligent misstatement can never cause economic loss

   Explanation. Deceit requires proof that the defendant knew the statement was false or was reckless as to its truth (dishonest intent); negligent misstatement only requires carelessness within a special relationship of reliance.

7. Before Hedley Byrne, what was the general common law position on liability for negligent statements causing pure economic loss?

   • Liability was unlimited and applied to any statement to anyone
   • The earlier decisions, such as Le Lievre v. Gould and Candler v. Crane, Christmas & Co, denied a duty of care for careless statements (correct answer)
   • Only criminal liability could arise from false statements
   • Liability applied only to statements made by lawyers

   Explanation. The common law once refused such claims, as the loss seemed too remote and open-ended. In Hedley Byrne the Lords said that Le Lievre v. Gould and Candler v. Crane, Christmas and Co were wrong in so far as they denied a duty.

8. Which best distinguishes injurious falsehood from negligent misstatement?

   • Injurious falsehood requires malice and protects trade/economic interests through a false statement; negligent misstatement requires only carelessness within a special relationship and protects against pure economic loss from reliance (correct answer)
   • They are the same tort under two different names
   • Injurious falsehood applies only to statements about people; negligent misstatement applies only to statements about goods
   • Negligent misstatement always requires fraudulent intent

   Explanation. Injurious falsehood requires a malicious false statement causing trade/economic damage; negligent misstatement requires only carelessness (not malice) within a special relationship of reliance, causing pure economic loss.

9. A published a false newspaper report that B's manufacturing business had permanently closed. B could not identify any specific customer who stopped buying because of the report, but overall sales fell sharply after publication. Applying Ratcliffe v Evans, B's claim would

   • Fail automatically since no specific customer was named
   • Likely succeed, since general evidence of a trade decline reasonably attributable to the falsehood is sufficient proof of damage (correct answer)
   • Only succeed if B proves the statement was made without malice
   • Only succeed in a criminal court, not a civil one

   Explanation. As in Ratcliffe v Evans itself, general evidence of a trade decline caused by a false publication is sufficient — the plaintiff need not identify specific customers by name.

10. A credit-rating agency gives a careless, inaccurate credit reference about a company, expressly stating it accepts 'no responsibility' for its accuracy. A lender relies on it and suffers loss. Applying Hedley Byrne, the agency is most likely

    • Automatically liable since a special relationship existed
    • Not liable, since the clear express disclaimer of responsibility negates the duty that would otherwise arise from the special relationship (correct answer)
    • Liable only in criminal law, not tort
    • Liable regardless of any disclaimer, since disclaimers are never effective

    Explanation. As in Hedley Byrne itself, a clear express disclaimer of responsibility, effectively communicated, negates the assumption of responsibility necessary for the duty of care to arise.