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Liability (Negligent misstatements (traditional view - there was only…
Liability
Negligent misstatements
traditional view - there was only liability for negligent misstatements causing physical damage, intentionally fraudulent statements or where there was a fiduciary or contractual relationship between the parties.
Hedley Byrne v Heller Partners - the liability for negligent misstatements could exist and that liability could arise in respect of pure economic loss. There must be a special relationship of trust and confidence between the parties.
Candler v Crane Christmas Co - the accountants owed no duty of care regarding economic loss to the third party; their responsibility was only to the client with whom they had a contractual relationship.
Special relationship - will only arise when advice given is in a business context and not when given on a social or informal occasion.
**In order to succeed in a claim for negligent misstatement, the claimant must show a special relationship by proving that:
- he relied on the special skill and judgement of the defendant;
- the defendant knew or ought to have know of this reliance and thus accepted responsibility for making the statement carefully**
Royal Bank of Scotland v Bannerman Johnstone Maclay - a duty would be owed to RBS if the defendants knew that the accounts would be passed to third parties and were likely to be relied upon. The defendants knew the accounts were likely to be used as therefore owed a duty of care to RBS. If they had wished to disclaim liability they should have included a disclaimer which they did not do.
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