G.L. c. 260, § 2A; Restatement (Second) of Torts § 552, as applied in Massachusetts
Negligent misrepresentation in Massachusetts — careless information, and the economic loss rule
A claim in Massachusetts trial courts · Last verified August 26, 2026
This is the claim for the person who gave you bad information without meaning to. The defendant did not lie — they were careless about whether what they said was true, and you relied on it and lost money.
It sits between fraud, which requires intent, and breach of contract, which requires a promise. And it occupies a specific doctrinal position in Massachusetts: it is the recognised exception to the economic loss doctrine, which otherwise bars tort recovery for purely financial harm.
What the claim is
Someone supplied you with false information in a business dealing, without taking reasonable care to get it right, and you relied on it and lost money.
Where the right comes from
Common law. Massachusetts follows the formulation in the Restatement (Second) of Torts § 552.
What a plaintiff has to prove
- The defendant supplied false information for the guidance of others in their business transactions;
- In the course of the defendant's business, profession or employment, or in a transaction in which the defendant had a pecuniary interest;
- Failure to exercise reasonable care in obtaining or communicating the information;
- Justifiable reliance by the plaintiff; and
- Pecuniary loss caused by the reliance.
No intent to deceive. No knowledge of falsity. Carelessness is the standard, which is why this claim survives where a fraud count fails on scienter.
Who owes the duty
The second element does real work. Massachusetts does not impose this duty on everyone who says something inaccurate — it applies to a defendant who supplies information in the course of their business or profession, or who had a pecuniary interest in the transaction.
The defendants who recur are the ones whose stock in trade is information:
- Accountants and auditors, on financial statements;
- Appraisers, on valuations;
- Home inspectors and engineers, on the condition of property;
- Real estate brokers, on the characteristics of what they are selling;
- Lenders and insurers, on the terms of what they offer;
- Sellers of a business, on its financials.
And the duty extends only so far. Massachusetts limits liability to the person or the limited group the defendant knew the information was intended to reach and influence. An accountant is not liable to every stranger who later reads the audit.
The economic loss doctrine, and why this claim matters
Massachusetts bars recovery in tort for purely economic loss — financial harm unaccompanied by personal injury or damage to other property. The rule keeps disappointed commercial expectations in contract, where the parties allocated the risk.
Negligent misrepresentation is the recognised exception. Where a defendant carelessly supplies false information for the plaintiff's guidance, the plaintiff may recover the pecuniary loss even though nothing was physically damaged.
That is the doctrinal reason this claim is pleaded so often in Massachusetts commercial litigation: where a negligence count would be dismissed on economic loss grounds, a negligent misrepresentation count can survive.
The defence responds in two ways: by arguing the claim is a contract claim in tort clothing, and by arguing the defendant supplied no information for guidance — only a promise about future performance, which is a contract matter.
How long you have to file
Three years under G.L. c. 260, § 2A, with the discovery rule.
A chapter 93A claim on the same facts carries four years under G.L. c. 260, § 5A, and negligent misrepresentation in trade or commerce is regularly held to be an unfair or deceptive act — which is both a longer period and a route to fees.
What has to happen before you file
Nothing, though many courts apply the Rule 9 particularity requirement to a negligent misrepresentation count pleaded alongside fraud, and a complaint that identifies the statement, the speaker and the falsity is on safer ground either way.
What the claim pays
Pecuniary loss caused by the reliance. The measure is out-of-pocket — the difference between what the plaintiff gave and what they received — rather than the benefit of the bargain that a fraud claim may reach.
Twelve percent prejudgment interest under G.L. c. 231, § 6B, from commencement.
No punitive damages at common law.
No attorney's fees on the common-law claim. The fee route is chapter 93A.
Reduced by comparative negligence. Because this is a negligence-based claim, G.L. c. 231, § 85 applies — a plaintiff who was careless in their own investigation has their recovery reduced, and barred past 50 percent. That is a difference from fraud, where comparative negligence has no role.
Who can be sued
The person who supplied the information, personally.
Their firm or employer, where they acted in the course of the business.
Not a party outside the group the information was meant to reach. This is the limit that defeats claims by remote plaintiffs.
Common defenses
- The statement was an opinion or a prediction, not information about existing fact.
- No duty — the defendant was not in the business of supplying such information and had no pecuniary interest.
- The plaintiff was not in the group the information was intended to influence.
- Reliance was not justifiable — the plaintiff conducted its own diligence, or the written agreement contradicted the statement.
- The economic loss doctrine, where the claim is a contract dispute in substance.
- Comparative negligence.
- A disclaimer or integration clause, which courts weigh but do not always honour.
- Limitations.
What people get wrong
No intent is required. Plaintiffs abandon good claims because they cannot prove the defendant knew the statement was false. That is fraud's element, not this one.
The damages are smaller than fraud's. Out-of-pocket rather than benefit-of-the-bargain.
Comparative negligence applies here and not to fraud. A plaintiff who did a careless job of checking loses part of the recovery.
The duty is bounded. The defendant must have supplied the information in a business capacity, and to a person or group they knew would rely on it.
Fees come from 93A. On the same facts, the statutory claim gets four years and a mandatory fee award.
Where it came from
The common law was slow to allow recovery for careless words. Deceit required proof of a lie, and courts worried that liability for negligent statements would be, in a famous formulation, liability in an indeterminate amount for an indeterminate time to an indeterminate class.
Restatement § 552 resolved that by limiting the duty rather than the standard of care: a defendant is liable for careless information only where they supplied it in a business capacity, and only to the person or limited group they intended to reach. The class is determinate because the defendant knew who was going to rely.
Massachusetts adopted that framework, and then had to fit it against the economic loss doctrine, which developed separately to keep commercial disappointments in contract. The two rules point in opposite directions — one allows recovery for purely financial harm caused by words, the other bars tort recovery for purely financial harm — and the accommodation is that negligent misrepresentation is an exception to the economic loss rule rather than a casualty of it.
That accommodation is why the claim is worth pleading in Massachusetts, and why defendants attack it by trying to recharacterise the case as a contract dispute.
Common questions
How long do I have to sue for negligent misrepresentation in Massachusetts?
Three years from when you knew or should have known of the misrepresentation. A 93A claim on the same facts gets four.
Do I have to prove the defendant lied on purpose?
No. Carelessness in obtaining or communicating the information is enough. Intent is fraud's element.
How is this different from fraud?
Fraud requires knowledge of falsity and can reach benefit-of-the-bargain damages. This claim requires only carelessness and pays out-of-pocket loss, and comparative negligence reduces it.
What is the economic loss doctrine?
The rule that bars tort recovery for purely financial harm with no personal injury or property damage. Negligent misrepresentation is the recognised exception to it.
Can I recover attorney's fees?
Not on this claim. Chapter 93A is the route.
Can I sue an accountant or appraiser whose report I relied on?
Yes, if you were within the person or limited group the information was intended to reach and influence.