Ratio Decidendi
A duty of care can arise in respect of negligent misstatements causing pure economic loss, where there is a 'special relationship' between the parties. The defendant must have assumed responsibility for the accuracy of the statement and the claimant must have reasonably relied on it.
Facts
Hedley Byrne, an advertising agency, asked their bankers to obtain a credit reference on Easipower Ltd from Easipower's bank, Heller & Partners. Heller gave a favourable reference but included a disclaimer of responsibility. Relying on the reference, Hedley Byrne extended credit to Easipower, which subsequently went into liquidation, causing Hedley Byrne a loss of £17,000.
Judgment Summary
The House of Lords held that in principle a duty of care could arise for negligent misstatements causing economic loss where a special relationship existed. However, Heller's disclaimer was effective to exclude liability on the facts. The case established the principle of liability for negligent misstatement and the concept of assumption of responsibility.
Key Quotes
"If someone possessed of a 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."
— Lord Morris
Subsequent Treatment
Foundation for negligent misstatement liability, extended in Caparo v Dickman and Henderson v Merrett Syndicates.