Hedley Byrne v Heller [1964]
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In Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465, the House of Lords addressed the issue of economic loss resulting from negligent misstatements in English tort law. Before this decision, the prevailing notion rejected the idea that a party could owe another a duty of care for statements made in reliance, with the only remedy being in contract law. However, the House of Lords overruled this position and recognised liability for pure economic loss not arising from a contractual relationship, applying the principle of assumption of responsibility to cases of commercial negligence.
Hedley Byrne, an advertising firm, sought a credit reference from Heller & Partners, a bank, regarding Easipower Ltd, a customer. Heller & Partners provided the reference with a disclaimer stating, "without responsibility on the part of this bank". Subsequently, Easipower went into liquidation, causing Hedley Byrne a loss of £17,000. Hedley Byrne sued Heller & Partners, alleging negligence in providing misleading information.
The defendant raised two key issues. Firstly, they argued the lack of a direct nexus or proximity in negligence law, questioning whether a duty of care was owed regarding the statements. Secondly, Heller & Partners contended that the disclaimer excluded liability, making reliance on the reference unreasonable.
The court found that there was a sufficiently proximate relationship between the parties, creating a duty of care. It was reasonable for Heller & Partners to have known that the information given would likely be relied upon for entering into a contract. However, the court held that, on the facts, the disclaimer was sufficient to discharge any duty created by Heller's actions, and there were no orders for damages.
The case established several key legal principles. It recognised liability for pure economic loss not arising from a contractual relationship, introducing the principle of assumption of responsibility in commercial negligence cases. The judgment emphasised that a duty of care arises when someone possessing special skill undertakes, irrespective of contract, to apply that skill for the assistance of another who relies upon it. Additionally, the effectiveness of a disclaimer in discharging a duty of care was acknowledged.
The principles established in Hedley Byrne had a significant impact on subsequent cases. It influenced decisions such as Home Office v Dorset Yacht Co [1970], Smith v Eric S Bush [1990], White v Jones [1995], and Henderson v Merrett Syndicates Ltd [1994], extending liability to highly proximate third-party consumers, overriding disclaimers in consumer settings, and allowing claims in both contract and tort for economic loss.
Hedley Byrne marked a pivotal shift in English tort law, recognising liability for economic loss resulting from negligent misstatements and introducing the concept of assumption of responsibility. Its enduring influence is evident in the application of its principles in subsequent cases, shaping the legal landscape concerning negligence and economic loss.
Hedley Byrne, an advertising firm, sought a credit reference from Heller & Partners, a bank, regarding Easipower Ltd, a customer. Heller & Partners provided the reference with a disclaimer stating, "without responsibility on the part of this bank". Subsequently, Easipower went into liquidation, causing Hedley Byrne a loss of £17,000. Hedley Byrne sued Heller & Partners, alleging negligence in providing misleading information.
The defendant raised two key issues. Firstly, they argued the lack of a direct nexus or proximity in negligence law, questioning whether a duty of care was owed regarding the statements. Secondly, Heller & Partners contended that the disclaimer excluded liability, making reliance on the reference unreasonable.
The court found that there was a sufficiently proximate relationship between the parties, creating a duty of care. It was reasonable for Heller & Partners to have known that the information given would likely be relied upon for entering into a contract. However, the court held that, on the facts, the disclaimer was sufficient to discharge any duty created by Heller's actions, and there were no orders for damages.
The case established several key legal principles. It recognised liability for pure economic loss not arising from a contractual relationship, introducing the principle of assumption of responsibility in commercial negligence cases. The judgment emphasised that a duty of care arises when someone possessing special skill undertakes, irrespective of contract, to apply that skill for the assistance of another who relies upon it. Additionally, the effectiveness of a disclaimer in discharging a duty of care was acknowledged.
The principles established in Hedley Byrne had a significant impact on subsequent cases. It influenced decisions such as Home Office v Dorset Yacht Co [1970], Smith v Eric S Bush [1990], White v Jones [1995], and Henderson v Merrett Syndicates Ltd [1994], extending liability to highly proximate third-party consumers, overriding disclaimers in consumer settings, and allowing claims in both contract and tort for economic loss.
Hedley Byrne marked a pivotal shift in English tort law, recognising liability for economic loss resulting from negligent misstatements and introducing the concept of assumption of responsibility. Its enduring influence is evident in the application of its principles in subsequent cases, shaping the legal landscape concerning negligence and economic loss.
