Tort Law Tue 7th Nov
NEGLIGENT ADVICE
General rule – no recovery for pure economic loss unless, 2 exceptions; consequential
economic loss, negligent advice.
Negligent advice usually causes economic loss rather than physical damage.
“Words are more volatile than deeds. They travel fast and for a field. They are used
without being expended”.
Hedley Bryne v Heller [1964)
Claimants were a firm of advertising agents. Because of the doubtful
creditworthiness of a new client called EasiPower limited they asked their bank to
telephone EasiPowers Bank. Bank said they ‘considered good for normal business
engagements. EasiPower later went into liquidation owing claimant; £17,000.
Duty owed, in situations like this, duty to not give poor advice.
Statements could give rise to a liability in tort when made negligently, carelessly
or in a situation where duty owed. Key; ‘special relationship’.
Special Relationships
Duty arises when; the claimant relied on the defendant’s skill and judgement or
his ability to make careful enquiry.
The defendant knows, or ought reasonably to have known, that the claimant was
relying on him and it was reasonable for the claimant to rely on the
defendant.
Caparo Industries v Dickman – 1991
Accountants owe no duty. Report had various purpose. D had to have knowledge of
a specific transaction for which the C would be very likely to rely on D’s statement
or advice.
, Determining whether a duty was owed;
the purpose for which the statement was made.
the purpose for which the statement was communicated.
the relationship between the adviser, the advisee and any relevant third party
the size of any class to which the advisee belonged.
the state of knowledge of the adviser
reliance by the advisee.
Assumption of Responsibility
• White v Jones [1995] 1 ALL ER 691 HL
• After falling out with his adult daughters an elderly man cut them out of his will.
Three months later he changed his mind. He instructed his solicitor to leave them
£9,000 each. He died on the 14th of September. Unfortunately, the solicitors had
not carried out the work on the will which meant there was no legacy for the
daughters.
• Held; claim was successful, daughters relied on solicitor.
West Bromwich Albion Football Club Ltd v El-Safty [2005]
HELD: Their claim was dismissed. – the football club itself was not owed a duty of care
not be given bad advice. Royce J found (at p [55]) that the surgeon was giving advice
to Mr Appleton regarding how best to cure his knee. The surgeon never indicated that
the football club could rely on his advice.
Mutual Life Assurance Co v Evatt [1971]
If you lead someone to believe you have knowledge or expertise and answer their
questions knowing the purpose (Hedley Byrne criteria) then you are responsible if
you answer the question incorrectly.
NEGLIGENT ADVICE
General rule – no recovery for pure economic loss unless, 2 exceptions; consequential
economic loss, negligent advice.
Negligent advice usually causes economic loss rather than physical damage.
“Words are more volatile than deeds. They travel fast and for a field. They are used
without being expended”.
Hedley Bryne v Heller [1964)
Claimants were a firm of advertising agents. Because of the doubtful
creditworthiness of a new client called EasiPower limited they asked their bank to
telephone EasiPowers Bank. Bank said they ‘considered good for normal business
engagements. EasiPower later went into liquidation owing claimant; £17,000.
Duty owed, in situations like this, duty to not give poor advice.
Statements could give rise to a liability in tort when made negligently, carelessly
or in a situation where duty owed. Key; ‘special relationship’.
Special Relationships
Duty arises when; the claimant relied on the defendant’s skill and judgement or
his ability to make careful enquiry.
The defendant knows, or ought reasonably to have known, that the claimant was
relying on him and it was reasonable for the claimant to rely on the
defendant.
Caparo Industries v Dickman – 1991
Accountants owe no duty. Report had various purpose. D had to have knowledge of
a specific transaction for which the C would be very likely to rely on D’s statement
or advice.
, Determining whether a duty was owed;
the purpose for which the statement was made.
the purpose for which the statement was communicated.
the relationship between the adviser, the advisee and any relevant third party
the size of any class to which the advisee belonged.
the state of knowledge of the adviser
reliance by the advisee.
Assumption of Responsibility
• White v Jones [1995] 1 ALL ER 691 HL
• After falling out with his adult daughters an elderly man cut them out of his will.
Three months later he changed his mind. He instructed his solicitor to leave them
£9,000 each. He died on the 14th of September. Unfortunately, the solicitors had
not carried out the work on the will which meant there was no legacy for the
daughters.
• Held; claim was successful, daughters relied on solicitor.
West Bromwich Albion Football Club Ltd v El-Safty [2005]
HELD: Their claim was dismissed. – the football club itself was not owed a duty of care
not be given bad advice. Royce J found (at p [55]) that the surgeon was giving advice
to Mr Appleton regarding how best to cure his knee. The surgeon never indicated that
the football club could rely on his advice.
Mutual Life Assurance Co v Evatt [1971]
If you lead someone to believe you have knowledge or expertise and answer their
questions knowing the purpose (Hedley Byrne criteria) then you are responsible if
you answer the question incorrectly.
