Hedley+Byrne+v.+Heller



Facts: The defendant (bank) provided a statement of credit regarding a customer for their credit-worthiness. In relying on that statement, the plaintiffs invested and lost money. They are now seeking to hold the D liable for the ensuing damage.

Issue: (1) Smaller: Can a person recover from losses suffered through innocent misrepresentation? (2) Bigger Picture: Does the neighbour principle apply to words aloud as opposed to deeds?

Holding: The appeal is dismissed. Though a duty of care is recognized, there are no costs awarded.

Reasoning: The case is three concurrences. All establish that in (2) the neighbour principle can certainly apply to words.

Lord Reid: · The law ought to treat differently negligent words and negligent acts. · Innocent misrepresentation gives no rise to action. There must be more. · In the case of a K, this would be a question of a warranty, not whether there was any duty. · This is a question of whether or not the undertaking of a duty of care can be inferred. · He finds that the limited caveat demonstrates that there was no intention to undertake the duty of care.

Lord Morris of Borth-y-Gest: · Fact of form (words) does not prevent liability from arising. · When someone possessing a skill undertakes to apply that skill for another, a duty of care arises. · The discharge of liability in this case was sufficient.

Lord Devlin: · “A distinction between negligence in word and negligence in deed might leave the law defective but at least it would be intelligible” · The fact that the service was performed gratuitously is not enough to shield from liability. · As professionals, they are liable for advice given. · However: given the disclaimer, “a man cannot be said voluntarily to be undertaking responsibility if at the very moment when he is said to be accepting it he declares that in fact he is not.”