A1.803 Liability to third parties

Administration and compliance

A1.803 Liability to third parties

A1.803 Liability to third parties


The courts have spent many years seeking to determine the extent to which a professional may owe a duty of care to a third party. In general, and as a matter of public policy, they have sought to restrict the expansion of the circumstances in which such a duty to prevent purely economic loss may be owed.

This was first considered in the context of negligent misstatements and negligent advice in the case of Hedley Byrne & Co Ltd v Heller & Partners Ltd1 where the claimants had relied to their detriment on references provided by the defendant bank. The House of Lords recognised that although in that particular case the defendant did not owe a duty of care to the claimants, because the references had been given 'without responsibility', in principle such a duty could be owed even where there was no contractual relationship between the parties. However, the House of Lords was concerned to ensure that any claim for negligent misstatement for economic loss was contained and to do this introduced the principle that liability depended on the existence of a 'special relationship' between the parties based upon 'an assumption of responsibility' by the maker of the statement.

The principles in Hedley Byrne were extended to omissions by Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp2 and then to negligent acts such as the provision of services other than advice and information by Henderson v Merrett Syndicates Ltd3.

In addition to the 'assumption

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