Hedley Byrne Case
Hedley Byrne & Co Ltd v Heller & Partners Ltd, [1964]
Facts:
Hedley (a firm) wanted to know if it would be advisable to extend credit to a customer, Easipower.
Hedley asked Heller whether it would be advisable.
Heller advised Hedley that it was appropriate to extend credit to Easipower.
Hedley extended credit and Easipower went out of business.
Hedley sued Heller.
Issues:
Did Heller owe Hedley a duty of care under legal liability of companies’ act 1965?
Does the duty of care apply to statements that cause pure economic loss?
Ratio:
A duty of care can arise with respect to careless statements that cause pure economic loss (obiter)
As noted later, in Queen v Cognos Inc, [1993] 1 SCR 87, the Hedley Byrne test has 5 general requirements:
1. There must be a duty of care based on a “special relationship” between the representor and the representee.
2. The representation in question must be untrue, inaccurate, or misleading.
3. The representor must have acted negligently in making said misrepresentation.
4. The representee must have relied in a reasonable manner, on said negligent misrepresentation.
5. The reliance must have been detrimental to the representee in the sense that damages resulted.
Analysis:
The court dismissed the case since there was no duty of care based on the facts
Significant obiter: A duty of care can arise with respect to careless statements that cause pure economic loss.
Royal Bank of Scotland PLC V Bannerman Johnstone Mclay and Others (2002)
The bare facts - albeit obscured by a blizzard of comment and interpretation - have been well rehearsed in the press. We announced that, with immediate effect, every audit report issued by PricewaterhouseCoopers on a UK client company will include additional language clarifying those parties to whom we owe a duty of care as auditors (the members of the company) and those to whom we do not (anyone else).
This additional language does not change our liability one iota from what everyone had understood it to be
Facts:
Hedley (a firm) wanted to know if it would be advisable to extend credit to a customer, Easipower.
Hedley asked Heller whether it would be advisable.
Heller advised Hedley that it was appropriate to extend credit to Easipower.
Hedley extended credit and Easipower went out of business.
Hedley sued Heller.
Issues:
Did Heller owe Hedley a duty of care under legal liability of companies’ act 1965?
Does the duty of care apply to statements that cause pure economic loss?
Ratio:
A duty of care can arise with respect to careless statements that cause pure economic loss (obiter)
As noted later, in Queen v Cognos Inc, [1993] 1 SCR 87, the Hedley Byrne test has 5 general requirements:
1. There must be a duty of care based on a “special relationship” between the representor and the representee.
2. The representation in question must be untrue, inaccurate, or misleading.
3. The representor must have acted negligently in making said misrepresentation.
4. The representee must have relied in a reasonable manner, on said negligent misrepresentation.
5. The reliance must have been detrimental to the representee in the sense that damages resulted.
Analysis:
The court dismissed the case since there was no duty of care based on the facts
Significant obiter: A duty of care can arise with respect to careless statements that cause pure economic loss.
Royal Bank of Scotland PLC V Bannerman Johnstone Mclay and Others (2002)
The bare facts - albeit obscured by a blizzard of comment and interpretation - have been well rehearsed in the press. We announced that, with immediate effect, every audit report issued by PricewaterhouseCoopers on a UK client company will include additional language clarifying those parties to whom we owe a duty of care as auditors (the members of the company) and those to whom we do not (anyone else).
This additional language does not change our liability one iota from what everyone had understood it to be