Negligent Misstatement Case

Max’s friend Charlie wishes to purchase a restaurant. One evening he finds a Greek restaurant, Bruno’s, for sale, located on King’s Avenue, around the corner from Max’s restaurant, The Hercules. The restaurant is full of customers. A few days later, Charlie speaks to Max about his plans. Charlie explains that he is very keen to buy the business but that he has never owned a restaurant or even worked in the industry before, and he would appreciate Max’s advice and guidance. Max assures Charlie that Bruno’s appears to be a very successful restaurant and that he is ‘almost guaranteed’ to make a profit in the first 12 months. Charlie immediately decided to purchase the restaurant with his brother Harley. One year later they are on the verge of bankruptcy; the restaurant was not as popular or as profitable as they expected, and turnover has declined even further since they took over the business.
Are Charlie and/or Harley able to take any action against Max?

This essay will discuss the requisite elements for establishing negligent misstatement and the issue of liability to third parties. This area of business law is supported by a number of cases, which have established
There is no indication that Charlie advised Max that he intended to enter a partnership with Harley and that he would share the advice with him. In Tepko Pty Ltd v Water Board (2001), landowners accessed a letter the Water Board had written to a third party and subsequently provided it to their bank, who acted in reliance of the advice in the letter. The Water Board was not aware of that the landowners may have intended to use the information provided in the letter. Based on the facts provided, there does not appear to be any way for Max to have been aware that the information would be provided to Harley and thus be held liable by Harley for the negligent