Hedley Byrne v Heller

Hedley Byrne and Company Ltd. v Heller and Partners Ltd. [1963] 2 All E.R. 575

Hedley Byrne were a firm of Advertising Agents. Heller and Partners Ltd., were Merchant Bankers.

Hedley Byrne needed to ascertain the creditworthiness of a client, Easipower Ltd., who were banking with Heller and Partners.

Hedley Byrne got their Bank, National Provincial Bank, to obtain a report from Heller and Partners.

Firstly, the National Provincial Bank telephoned Heller and Partners to find out whether Easipower Ltd., would be good for an advertising contract of £8000 – £9000.

Later in 07/11/1958, the National Provincial Bank wrote to Heller and Partners to find out whether Easipower Ltd., was trustworthy in the way of business to the extent of £ 100,000 per annum.

On 11/11/1958, Heller and Partners replied stating that,

Confidential

For your private use and without responsibility on the part of the Bank or its Officials. . . . Easipower Ltd. Respectably constituted Company, considered good for it’s ordinary business engagements

National Provincial Bank communicated these replies to Hedley Byrne. Hedley Byrne relied on these statements and as a result they lost over £17,000 when Easipower Ltd., went into liquidation.

Hedley Byrne sought to recover the loss from Heller and Partners as damages on the ground that these replies were given negligently and in breach of their duty to exercise care in giving them.

Appeal dismissed.

Liability excluded. No duty of care

Donoghue v Stevenson

Donoghue v Stevenson [1932] UKHL 100

In the evening of 26th August 1928, May Donoghue went to Wellmeadow Cafe in Paisley, Scotland with her lady friend.

The friend ordered a Pear and Ice Cream for herself and a Scotsman Ice Cream Float, a mix of Ice Cream and Ginger Beer, for Donoughue.

The owner of the Cafe, Francis Minchella, brought over a tumbler of Ice Cream and poured Ginger Beer on it from a brown and opaque bottle labelled D. Stevenson, Glen Lane, Paisley. 

Donoghue drank some of the Ice Cream Float.

Donoghue’s friend poured the remaining Ginger Beer into the tumbler and a decomposed Snail also floated out of the bottle.

Donoghue claimed that she felt ill from the sight complaining of abdominal pain. She received emergency treatment and subsequently diagnosed with severe gastroenteritis and shock.

Donoghue lodged a writ in the Court of Sessions, Scotland’s highest civil court, seeking £500 as damages.

Her action failed,but she was granted leave to appeal to the House of Lords.

House of Lords established Stevenson should be responsible for the well being of individuals who consume his products, given that they cannot be inspected. The case was remitted to the Court of Sessions in Scotland. Stevenson died before the case was finalized and its reported that there was an out of court settlement by the Executors of £ 200 of the £ 500 that was claimed.

Donoghue v Stevenson establishes 3 major legal principles.

1.It established that negligence is a tort. As Donoghue had not purchased the Ginger Beer, she could not establish contractual agreement with Stevenson;

2.Manufacturer has a duty of care to the consumer or users of their products; and

3.Neighbor principle – The rule that you are to love your neighbour becomes in law you must not injure your neighbour,,which raises the question as to who is my neighbour.

Lord Atkin 

The rule that you are to love your neighbour becomes in law,you must not injure your neighbour, and the lawyer’s question, who is my neighbour? receives a restricted reply. You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. Who, then,in law, is my neighbour? The answer seems to be – persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions which are called in question