HEDLEY BYRE &CO LTD v HELLER& PARTNERS LTD
Facts
Hedley Byrne were an advertising firm of agents. A customer , Easipower Ltd, put in a large
order. Hedley wanted to check their financial position and creditworthiness, and so asked
their bank,[a] to get a report from Easipower’s bank, Heller & Partners Ltd., who replied in a
letter that was headed,
"without responsibility on the part of this bank"
...Easipower is,
"considered good for its ordinary business engagements".
The letter was sent for free. Easipower soon went into liquidation, and Hedley Byrne lost
£17,000 (equivalent to 470,000 in 2023) on contracts. Hedley Byrne sued Heller & Partners
for negligence, claiming that the information was given negligently and was misleading.
Heller & Partners argued:
Lack of a direct nexus, also known as proximity in negligence law (nor an assumption
of responsibility of a type established in law) of duty of care. If so, this would mean
none was owed regarding the statements.
Liability was excluded; the header disclaimer used would make it unreasonable to rely
on the bank reference/solvency statement, even if the law recognised some degree of
duty of care owed.
JUDGEMENT
The court found:
the relationship between the parties was "sufficiently proximate" as to create a duty of care. It
was reasonable for them to have known that the information that they had given would likely
have been relied upon for entering into a contract of some sort. That would give rise, the
court said, to a "special relationship", in which the defendant would have to take sufficient
care in giving advice to avoid negligence liability. The relationship was that the plaintiff
trusted the defendant with the information and therefore the defendant ought to have been
honest however, on the facts, the disclaimer was sufficient to discharge any duty created by
Heller's actions. There were no orders for damages, because, A man cannot be said
voluntarily to be undertaking a responsibility if at the very moment when he is said to be
accepting it he declares that in fact he is not.
Lord Morris of Borth-y-Gest wrote,
I consider that it follows and that it should now be regarded as settled that if someone
possessing special skill undertakes, quite irrespective of contract, to apply that skill for the
assistance of another person who relies upon such skill, a duty of care will arise. The fact that
the service is to be given by means of or by the instrumentality of words can make no
difference. Furthermore, if in a sphere in which a person is so placed that others could
reasonably rely upon his judgment or his skill or upon his ability to make careful inquiry, a
person takes it upon himself to give information or advice to, or allows his information or
advice to be passed on to, another person who, as he knows or should know, will place
reliance upon it, then a duty of care will arise. ...in my judgment, the bank in the present case,
by the words which they employed, effectively disclaimed any assumption of a duty of care.
They stated that they only responded to the inquiry on the basis that their reply was without
responsibility. If the inquirers chose to receive and act upon the reply they cannot disregard
the definite terms upon which it was given. They cannot accept a reply given with a
stipulation and then reject the stipulation. Furthermore, within accepted principles... the
words employed were apt to exclude any liability for negligence1
This is an English tort law case on economic loss in English tort law resulting from a
negligent misstatement. Prior to the decision, the notion that a party may owe another a duty
of care for statements made in reliance had been rejected, with the only remedy for such
losses being in contract law. The House of Lords overruled the previous position, in
recognising liability for pure economic loss not arising from a contractual relationship,
applying to commercial negligence the principle of "assumption of responsibility".
1
Hedley Byre &Co v Heller & Partners Ltd Pp 502-4
