What constitutes 'negligent misrepresentation' in an agency relationship?

Negligent misrepresentation in an agency relationship occurs when a party provides inaccurate information without the intent to deceive but fails to exercise reasonable care in ascertaining the truth. This means that even if the person did not intend to mislead, they can still be held liable if they did not take the necessary steps to ensure the information they provided was accurate.

In an agency context, agents have a duty to be honest and provide accurate information to their principals. If an agent shares incorrect information and it results from a lack of reasonable diligence in verifying the facts, this scenario qualifies as negligent misrepresentation. This highlights the agent's responsibility to uphold a standard of care in their communications.

While other options might relate to misleading behavior, they involve elements such as intentional deceit or omissions that do not fit the criteria for negligent misrepresentation. In particular, intentional lying implies a conscious effort to deceive, and failing to disclose or withholding information suggests a more deliberate act than what is required for a negligent misrepresentation claim. Understanding this distinction is vital for anyone involved in agency relationships, as it underscores the level of care agents must exercise when providing information.