Hedley Byrne & Co Ltd v Heller and Partners
Ltd [1963] UKHL 4
Hedley Byrne
& Co, an advertising agent, was about to place some orders for advertising
for its client (Easipower Ltd) on TV and in newspapers which Hedley Byrne would
be personally liable for. Before going ahead with this, Hedley Byrne asked its bank to contact the client’s bank
for a credit reference.
Hedley
Byrne relied on the bank reference and placed large orders – which they lost
when Easipower went into liquidation. Whom could they sue?
1.
They
could queue with the other creditors in Easipower’s liquidation
2.
They
could sue the banks for negligence
They sued
the bank and would have been successful against the bank. The court approved
the dissent in the Candler case and established the tort of negligent
misstatement
However,
Hedley Byrne lost the case on a technicality – the bank was not liable because
of an exclusion clause in the reference letter – but the case did established
the principles of responsibility for negligent misstatement.
