The defendants, the Earl of Seafield and others, owned a grouse moor used for commercial shooting. The Earl was looking for a tenant for the land. In May 2006, Mr Lewis (the Earl's employee) and Mr Kennedy (the Earl's surveyor adviser) discussed the tenancy with Mr Erskine, who did not pursue the matter at that time.

Another individual who was interested in the tenancy raised concerns about possible overshooting during the 2006 season. In response to those concerns, on 4 August 2006, Mr Lewis emailed Mr Kennedy information about grouse counts (the email). The email included an incorrect estimation of the grouse population that was well in excess of the actual population. The second individual did not proceed further.

Mr Kennedy made further contact with Mr Erskine in September 2006. Mr Erskine was also concerned about overshooting. Mr Lewis directed Mr Kennedy to send the email to Mr Erskine, which Mr Kennedy did in October 2006.

The negotiations continued and Mr Erskine, with the defendants' knowledge, set up Cramaso as a limited liability partnership to enter into the lease with the defendants. Cramaso was incorporated in November 2006 and the lease was then executed.

Cramaso later discovered that the grouse population was smaller than it had been led to believe, and brought proceedings against the defendants in Scotland for damages for the misrepresentation made in the email.

At first instance, the Outer House of the Scottish Court of Session held that the email contained a material misrepresentation and that Mr Lewis had acted negligently, although honestly. However, as Cramaso did not exist when the email was sent, it could not recover damages. On appeal, the Inner House of the Scottish Court of Session held that there was no proximity between Cramaso and the defendants, so there was no duty of care, as required by Scots law (see box "Misrepresentation and duty of care"). Cramaso appealed.

The Supreme Court unanimously allowed the appeal. It held that:

The significance of the decision stems from the fact that this is the first reported case where it is made clear that a misrepresentation made to party A can be actioned by party B (given the appropriate relationship between A and B). While the Supreme Court acknowledged that the case was novel in some respects, given the specific facts, the judgment is not, in fact, a surprising one. As a consequence, there is no suggestion that the court has extended the law of negligent misrepresentation. It does seem that the principle in Briess v Woolley has been extended from fraudulent to negligent misrepresentation ([1954] AC 333).

While the decision adopted the usual principal and agent principles, it did so in circumstances where that relationship did not exist at the outset. It underlines the importance of understanding with whom you are in discussions at any given time and ensuring that, if there is a change in status, the parties make it clear that they are drawing a line under earlier exchanges (or do not do so only having expressly thought about the point; in some cases, a formal restatement of the current position may be appropriate). The parties should also consider extending entire agreement clauses to cover representations to third parties.

Future cases are likely to turn on the application of well-settled legal principles to the individual facts of the case. But, if selling grouse, count accurately.