Torts-Negligent Misrepresentation-Abolition of the Privity Requirement

Defendants, professional consulting engineers, contracted with the city of Chattanooga to design a sewage system. As part of their performance of the contract they prepared a report of geological conditions which was to be distributed by the city to prospective bidders. Plaintiff, a tunneling subcontractor, had no dealings with the defendants, but did rely on their report in making its bid. Because one of defendant’s draftsmen carelessly omitted pertinent geological information from the report, it took plaintiff three weeks longer to complete the work than had been anticipated. Plaintiff sued defendant for damages for misrepresentation; held, plaintiff may recover. A person who makes a material and negligent misrepresentation in the course of a business transaction is liable for injuries suffered because of justifiable reliance on the misrepresentation by any member of that class of persons whose reliance was reasonably foreseeable. Texas Tunneling Co. v. City of Chattanooga, 204 F. Supp. 821 (E.D. Tenn. 1962).