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Hedley Byrne & Co Ltd v Heller & Partners Ltd, [1964] AC 465 (Link)

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.

Issue(s):

Did Heller owe Hedley a duty of care?
** 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


Discussion

  1. Fiat Justitia Ruat Caelum 32

    Thanks again!

  2. Dear learneddan,

    I am afraid the first sentence of analysis is incorrect. The House of Lords did dismiss the case but not because there is no duty of care on the facts but because Heller’s advice contained an exclusion clause that had been found viable. The facts of the case established the exception to the rule in negligence that there is no duty for pure economic loss. Had not been for the disclaimer, Hedley Byrne would have won.

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