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 Massachusetts, the elements of a claim for negligent misrepresentation are consistent with the general common law principles. To establish such a claim, a plaintiff must prove that: (1) the defendant made a representation in the course of their business or a transaction in which they had a financial interest; (2) the defendant provided false information intended to guide others in their business decisions; (3) the defendant failed to exercise reasonable care or competence in communicating this information; and (4) the plaintiff suffered a financial loss as a result of justifiably relying on this false representation. Justifiable reliance typically involves a factual determination, but it can be dismissed as a matter of law if the circumstances indicate that reliance on the representation was not reasonable. Courts will consider the relationship between the parties and the nature of the transaction when evaluating justifiable reliance. In arm's-length transactions, parties are expected to exercise ordinary care to protect their interests, and failure to do so due to overconfidence in the other party's honesty does not excuse a lack of due diligence. A party is deemed to have knowledge of what a reasonably prudent person would have discovered through proper investigation, and cannot claim to have justifiably relied on a misrepresentation without having taken steps to verify it, especially when their knowledge, experience, or background suggests that such verification was warranted.