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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!

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