Hedley Byrne v Heller (1963) - Negligent Misstatement

Hedley Byrne v Heller (1963)

Facts of the Case:

• Hedley Byrne, a firm of advertising agents, asked Heller & Partners, a merchant bank, for a reference about a company called Easipower Ltd.
• Heller & Partners provided a positive reference, stating that Easipower Ltd was a respectable company.
• Relying on this reference, Hedley Byrne entered into a contract with Easipower Ltd, which ultimately turned out to be a bad debt.
• Hedley Byrne sued Heller & Partners for negligent misstatement.

Key Issues:

• Whether a duty of care was owed by Heller & Partners to Hedley Byrne in providing the reference.
• Whether Heller & Partners had assumed responsibility for the accuracy of the reference.

Judgment:

• The House of Lords held that Heller & Partners did owe a duty of care to Hedley Byrne.
• The court established a new duty of care for negligent misstatements, where a person provides information or advice to another, knowing that the other will rely on it.
• The court also held that Heller & Partners had assumed responsibility for the accuracy of the reference.
• However, the court ultimately found in favor of Heller & Partners, as they had included a disclaimer of liability in their reference.

Significance:

• The case established a new duty of care for negligent misstatements, which has had a significant impact on the law of tort and contract.
• It has been applied in various situations, including professional advice, financial statements, and product descriptions.
• The case highlights the importance of careful drafting of disclaimers and limitation of liability clauses.