13-1632. Negligent misrepresentations.

            A party is liable for damages caused by his negligent and material misrepresentation.

            A material misrepresentation is an untrue statement which a party intends the other party to rely on and upon which the other party did in fact rely.

            A negligent misrepresentation is one where the speaker has no reasonable ground for believing that the statement made was true.

DIRECTIONS FOR USE

            This instruction is to be used in those cases where the misrepresentation is not fraudulent in character. See UJI 13-1633 NMRA for fraudulent misrepresentation.

COMMITTEE COMMENTS

            Negligent misrepresentation, resulting in damage is a cause of action distinct from fraud and deceit or rescission. Maxey v. Quintana, 84 N.M. 38, 499 P.2d 356 (Ct.App.), cert. denied, 84 N.M. 37, 499 P.2d 355 (1972) (damages for negligent misrepresentation that existing mortgage on house was V.A. rather than F.H.A., resulting in cost to buyer being higher).

            While New Mexico recognizes recovery for damages under both fraudulent (see UJI 13-1633) and negligent misrepresentation, such misrepresentations, along with innocent misrepresentations in certain circumstances, may give rise to other remedies or defenses. Thus, where a contract is entered into as a result of a misrepresentation -- fraudulent, negligent or innocent -- the misrepresentation may give rise to a defense to a suit for breach of contract or may give rise to a claim for rescission of the contract. See Snell v. Cornehl, 81 N.M. 248, 466 P.2d 94 (1970) (claim for rescission based on misrepresentation); McLean v. Paddock, 78 N.M. 234, 430 P.2d 392 (1967) (contract induced by fraud is voidable). Typically claims or rescission and defenses to contract based on misrepresentation are determined by the judge and are not submitted to the jury.