Why Hedley Byrne v Heller is important
This case introduced the ‘assumption of responsibility’ as a test for the duty of care. It also confirmed that a person can owe a duty of care when speaking words, rather than only when they are ‘acting’, and that any duty was subject to a disclaimer of liability.
Hedley Byrne sought a reference about a potential customer, Easipower Ltd. HB’s bank obtained a reference from Easipower’s bank, Heller & Partners, which was given ‘without responsibility’. This meant that no contract was entered into between HB and Heller. Heller gave a positive reference, giving HB the confidence to contract with Easipower. The reference turned out to be false and Easipower entered into liquidation. HB suffered a substantial loss.
HB brought an action against Heller in the tort of negligence, alleging that Heller’s negligence caused HB’s loss.
Whether Heller owed HB a duty of care.
No duty of care was owed: whilst in principle Heller owed a duty of care, Heller was not liable because it gave the reference ‘without responsibility.’
The Judges were split on why Heller owed Hedley Byrne a duty: for Lords Morris and Hodson, the duty was imposed based on HB’s reliance on Heller’s specialist skill; for Lords Devlin and Reed, the duty had been assumed by Heller. The different reasoning impacted how their Lordships interpreted the effect of the disclaimer.
This reasoning is incredibly important in understanding the liability of a professional. To read more about the different judgements, visit the case summary for Hedley Byrne v Heller under the ‘professional negligence’ tab, found here.
Hedley Byrne introduced the ‘assumption of responsibility test’ as a way of finding a duty of care. Whilst Lords Morris, Hodson and Pearce did not rely on this reasoning, they did not reject the analysis of Lords Devlin and Reed suggesting that this formed part of the ratio of the case. This suggests that the ratio of the case is that the duty of care in tort can either be imposed or assumed.
Secondly, the case is important for confirming that the intention of the parties can override the duty owed in the tort of negligence, with all five judges concluding that Heller’s disclaimer meant no duty could be owed.