Professional advice and negligent misstatement

Hedley Byrne: Prior to the decision, the notion that a party may owe another a duty of care for statements made in reliance had been rejected,[1] with the only remedy for such losses being in contract law.[2] The House of Lords overruled the previous position, in recognising liability for pure economic loss not arising from a contractual relationship, introducing the idea of “assumption of responsibility

Jeb Fasteners: Held: The accountants owed a duty of care to the plaintiffs. They knew that they would rely upon the accounts. However in this case, the plaintiffs would have proceeded in any event, and so the negligence did not cause any of the damage actually suffered.

Morgan Crucible: The court set out the main principles under which a party can be liable for economic loss in negligence

Caparo: The House of Lords set out a “three-fold test”. In order for a duty of care to arise in negligence:

harm must be reasonably foreseeable as a result of the defendant’s conduct (as established in Donoghue v Stevenson),
the parties must be in a relationship of proximity, and
it must be fair, just and reasonable to impose liability

McNaughton: When considering the liability of an auditor in negligence, the fact and nature of any communications direct between the auditor and the potential investor must be allowed for. The court set out a non-exhaustive list of factors to be taken into account in determining whether the threefold test and the assumption of responsibility test for negligence are met.

This is WAY too deep for what is needed for F4!

OK?