Hedley Byrne V Hellers

The law has progressed throughout the years regarding liability for harm caused by negligent misstatements. Negligent misstatements occur when a pursuer relies upon a statement given by the defendant which, in turn, causes loss to the pursuer. Until the case of Hedley Byrne v Heller, the courts did not usually impose liability regarding negligent misstatements on the grounds of policy.
Before the case of Hedley Byrne v Heller, the idea that one party owed another a duty of care regarding misstatements was rejected. The only way to claim for loss was through contract law. This case overruled this previous outlook to negligent misstatements. The facts of the case are as such: the plaintiff asked his bank, National Provincial, to obtain information …show more content…
In this case, the claimants were shareholders and the defendants were auditors. The defendants negligently prepared an audit and the shareholders relied on this audit. The claimants used this audit to judge if further investments should be made. They proceeded to make an investment based on the favourable audit. The claimant proceeds to sue the auditors. The House of lords held that no duty of care was owed to the claimants. According to Lord Oliver, four features had to be present within the relationship between the defendant and the plaintiff before liability would be formed - The advice must be required for a specific purpose which must be made known to the adviser at the time advice is given; the defendant knows that the advice will be communicated to the advisee; the defendant knows that the advice is likely to be acted upon and lastly, the plaintiff must act on said …show more content…
Because of this, the expected beneficiaries did not inherit the money from the testator when he passed. The intended beneficiaries proceeded to sue the solicitors and it was held that a duty of care was in fact owed. Lord Goff overcame difficulties previously in place that stated a solicitor only has a duty of care to his client, that one cannot usually recover in the law of delict for pure economic loss and lastly, if a claim could be made in the instant case, many claims against solicitors could come forward. However, it was decided that solicitors had to be liable in this case in order for justice to the beneficiaries. The law was therefore required to expand in terms of negligent claims. Another judgement in this case from Lorde Browne-Wilkinson ruled that categories of cases where a special relationship can be held to exist are not closed. In his opinion, only two categories had been identified at that