Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465

The appellant company (H) appealed against the Court of Appeal’s decision that it could not recover damages arising from monies lost in reliance on the credit reference given by the respondent bank (X) in respect of one of X’s customers (E). H was an advertising agent who had placed substantial orders for advertising space for E, for which H was personally liable. H had enquired of X concerning the creditworthiness of E. In reliance on the representations of H refrained from cancelling the orders to relive its personal liability. X responded that E was considered good for its ordinary business engagements. E then went into liquidation and H lost money. H then sought to recover the money by a claim of negligence. H appealed.

Did the bank assume responsibility for its credit reference, giving rise to a duty in respect of reasonable financial reliance, or did its disclaimer prevent liability on these facts?

The House of Lords recognised that careless statements can, in an appropriate relationship, create liability for pure economic loss. An assumption of responsibility together with reasonable reliance could supply a duty even without a contract. However, Heller's reference was supplied under a disclaimer of responsibility, which prevented liability on the facts. Hedley Byrne therefore established the possibility of a duty while losing its own claim. The decision does not make every inaccurate statement actionable or every commercial conversation a professional undertaking. The circumstances in which the statement is made, the purpose of the communication and any effective qualification are central.

An assumption of responsibility and reasonable reliance can support a duty concerning negligent statements causing pure economic loss without a contract. Hedley Byrne's claim nevertheless failed because the reference was supplied without responsibility. The circumstances and any effective disclaimer determine the duty's scope.

Hedley Byrne is foundational because it recognises a route around the general restriction on pure economic loss while preserving limits on casual statements. Its result also matters: the claimant lost despite the legal development. Henderson later applied assumption-of-responsibility reasoning to professional services. Modern exclusions must be assessed under applicable statutory controls, so the historical effectiveness of Heller's disclaimer does not mean every modern professional can avoid responsibility through any printed warning.