Liability of Classification Society for Negligent Misrepresentation

The U.S. Court of Appeals for the Fifth Circuit ruled that a classification society may be liable to a third party for negligent misrepresentation of a ship’s condition. In the instant case, plaintiff agreed to purchase a ship if, among other things, the ship possessed a current class certificate free from any outstanding recommendations. At the direction of the owner, defendant class society surveyed the ship and issued the necessary certificate. After purchasing the ship, plaintiff discovered numerous deficiencies. Plaintiff sued defendant class society to recover the costs of repairs. On appeal, the court held that liability of class societies must be carefully considered. In this case, though, the class society knew that plaintiff would rely on the results of its survey. Thus, the class society owed a legal duty to plaintiff to perform its obligations in a professional manner. Otto Candies, LLC v. Nippon Kaiji Kyokai Cor