Legal principles and points:
- The House of Lords held in Henderson v Merrett Syndicates  that the principle established in Hedley Byrne & Co v Heller & Partners Ltd  AC 465 (the principle that a duty of care can arise where there is a voluntary assumption of responsibility)can also apply to a tort claim in contractual situations.
Facts of the case
- A number of members of Lloyd’s syndicates brought a claim against the underwriting agents, whom were managers of said syndicates, that a number of contracts were negligently drafted.
Issues in Henderson v Merrett Syndicates :
- The issue in the case was, inter alia, whether a duty of care was owed by the managing agents in tort
Held by the House of Lords
- It was held in this case that a duty of care was owed by the managing agents in tort both to ‘direct members’ and ‘indirect’ members of the syndicate. The existence of that duty of care was not excluded by virtue of the fact the parties were under a contractual agreement, and the members were therefore at liberty to pursue their claim in contract or in tort.
Lord Goff of Chieverly:
- [pg 773] “I turn immediately to the decision of the House of Lords in Hedley Byrne & Co Ltd v Heller & Partners Ltd . There, as is of course well known, the question arose whether bankers could be held liable in tort in respect of the gratuitous provision of a negligently favourable reference for one of their customers, when they knew or ought to have known that the plaintiff would rely on their skull and judgment in furnishing the reference, and the plaintiff in fact relied upon it and in consequence suffered financial loss. Your lordships held that in principle, an action would lie in such circumstances in tort; but that, in the particular case, a duty of care was negatived by a disclaimer of responsibility under cover of which reference was supplied”
- [pg 776]: “Furthermore, especially in a context concerned with a liability which may arise under a contract or in a situation “equivalent to contract,” it must be expected that an objective test will be applied when asking the question whether, in a particular case, responsibility should be held to have been assumed by the defendant to the plaintiff”
- [pg 776] “For if a person assumes responsibility to another in respect of certain services, there is no reason why he should not be liable in damages for that other in respect of economic loss which flows from the negligent performance of those services. It follows that, once the case is identified as falling within the Hedley Byrne principle, there should be no need to embark upon any further enquiry whether it is “fair, just and reasonable” to impose liability for economic loss.”