The elements of a claim for negligent misrepresentation are (1) the representation was made by a defendant in the course of his business, or in a transaction in which he had a pecuniary interest; (2) the defendant supplied false information for the guidance of others in their business; (3) the defendant did not exercise reasonable care or competence in obtaining or communicating the information; and (4) the plaintiff suffered pecuniary (financial) loss by justifiably relying on the representation.

Justifiable reliance usually presents a question of fact. But the justifiable-reliance element can be negated as a matter of law (on summary judgment or directed verdict) when circumstances exist under which reliance cannot be justified.

In determining whether justifiable reliance is negated as a matter of law, courts consider the nature of the parties’ relationship and the contract. In an arm's-length transaction, the defrauded party must exercise ordinary care for the protection of his own interests.

A failure to exercise reasonable diligence is not excused by mere confidence in the honesty and integrity of the other party. And when a party fails to exercise such diligence, it is charged with knowledge of all facts that would have been discovered by a reasonably prudent person similarly situated.

Thus, that party cannot blindly rely on a representation by a defendant where the plaintiff's knowledge, experience, and background warrant investigation into any representations before the plaintiff acts in reliance upon those representations.

In Hawaii, a claim for negligent misrepresentation requires that the defendant made a false representation in the course of business or a transaction where they had a financial interest, and did not exercise reasonable care in providing this information. The plaintiff must have suffered a financial loss by relying on this false representation. Reliance on the false information must be justifiable, which is typically a factual question, but can be determined as a matter of law in some cases. Courts will look at the relationship between the parties and the nature of the transaction to decide if reliance was justifiable. In a transaction where the parties are dealing at arm's length, the defrauded party is expected to exercise ordinary care to protect their interests. A failure to do so, due to overconfidence in the other party's honesty, does not excuse a lack of diligence. If a party does not exercise the diligence expected of a reasonably prudent person, they are considered to have knowledge of all the facts that such an investigation would have revealed, and therefore cannot claim justifiable reliance on the defendant's misrepresentations if their own background and experience should have prompted them to investigate further.