Caparo Industries PLC v Dickman [1990] UKHL 2 is a landmark case in UK tort law concerning the scope of the duty of care owed by a professional to a third party.
The case involved a company, Caparo Industries, which purchased shares in another company on the basis of financial statements prepared by the defendant, an accounting firm. When the shares decreased in value, Caparo sued the accounting firm for negligent misstatement.
The issue before the court was whether the accounting firm owed a duty of care to Caparo, a third party. The House of Lords held that a duty of care exists in the tort of negligence only where:
- harm is reasonably foreseeable as a potential result of the defendant's conduct (as established in Donoghue v Stevenson);
- the parties must be in a relationship of proximity; and
- it must be fair, just and reasonable to impose liability.
The court held that the accounting firm did not owe a duty of care to Caparo in this case, as there was no proximity between the parties. This case established the three-part test for establishing the existence of a duty of care in the tort of negligence.
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