Hedley Byrne v Heller [1963]

Plaintiffs, advertising agents, entered into various
advertising contracts with firm, Easipower.
In order to decide whether to give credit to E, plaintiffs
asked their bank to obtain references from E’s bankers, defendants.
Defendants gave favourable references ‘without
Defendants did not know inquiry concerned advertising
contract, but must have known references would be passed on.
In reliance on references, plaintiffs increased
expenditure on E’s account.
E went into liquidation and plaintiffs suffered
substantial loss.
Sought to recover from defendants in action for
negligently giving favourable references.
House of Lords held no duty arose because of
disclaimer, but that in appropriate circumstances duty of care could arise.
Accepted that reasonable foresight of harm was not in
itself sufficient because of potentially far-reaching effect of spoken (or
written) word – therefore ‘special relationship’ required.
Not certain, but appeared to be three requirements for
such relationship:
1.  Plaintiff
relied on defendant’s skill and judgement or his ability to make careful
2.  Defendant knew,
or ought reasonably to have known, that plaintiff was relying on him, and
3.  It was reasonable
in the circumstances for the plaintiff to rely on the defendant
[This evident from speeches of Lords Reid and Morris.
Could sum this up as special relationship resulting
from ‘reasonable reliance’
However, another idea in speeches – special relationship
results from ‘assumption of responsibility’.
eg Lord Devlin thought one category of special relationship
would be where there is assumption of responsibility in circumstances in which,
but for absence of consideration, there would be a contract.
Later cases tend to emphasise voluntary assumption of
responsibility more than reasonable reliance, eg Henderson.