Discussing the Outcome of Hedley Byrne & Co Ltd v Heller & Partners Ltd-Law Assignment Sample

QUESTION

 

Discuss the outcome of Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 as though the Misrepresentation Act 1967 had been in effect at the time the case was decided.

3000 Words

 

 

ANSWER

 

 

OUTCOME OF HEDLEY BYRNE & CO Ltd V HELLER & PARTNERS Ltd

Introduction

It has been frequently seen that a negligent misstatement gives rise to an action that leads to economic loss. In this respect, when a party seeking information from the another, the second party believes that the first party relies on his skills which gives birth to duty of care. Analysis of the concerned case study focuses on the conflicts between Hedley Byrne v Heller.

The current essay includes the description of the Misrepresentation Act 1967 [section 2] for analysing the mode of judgement of the concerned case study. Besides, the judgements of the court in presence of Misrepresentation Act have also been discussed. In addition the justification and the critical impacts of this law on the result of the case study are mentioned in brief.

Brief explanation of case study

The case focuses on separate individuals namely Hedley Byrne and his customer Easipower Ltd. Hedley Byrne were the agent of advertisement. Their customer, Easipower made a contract with them for putting a large order. In order to have assurance regarding the confirmation of the order Hedley Byrne wanted to check the financial abilities of their customer. Thereby, they contacted with their own banking partner namely National Provincial Bank¹. The bank was agreed to have the report from Easipower bank, Heller & Partners Ltd. The Easipower bank sent a letter through which they denied their responsibilities of ensuring truth regarding financial status of Byrne’s customer. The letter clearly demonstrated that the customer of Hedley Byrne can be considered as perfect for ordinary business engagements.

It has been seen that Easipower went for liquidation and it caused Hedley to loss £17000 on making the contract. Therefore, Hedley Byrne subjected Heller & Partner for negligence. They claimed it clearly that the given information were not appropriate which misleads them. In this regard, Heller & Partner was involved into an argument that there was no duty of care was mentioned through the statements. Moreover, the accruements emphasises on the fact that liability was excluded for this particular matter.

Description of misrepresentation act 1967

Misrepresentation is basically a false statement of fact which includes the representee to deal with a contract. It has been seen that a statement made during the course of negotiations is classed as representation whereas the term misrepresentation arises the previously made true statement turned to be untrue². Mainly three types of misrepresentation can be seen such as innocent misrepresentation, negligent misrepresentation and the fraudulent misrepresentation. The remedy for misrepresentation depends on the above mentioned types but it mainly leads to rescission and/or damages to the statements. The Misrepresentation Act 1967 basically emphasises on the types of false statements and their mode of representations³.

This act immensely focuses on the negligent misrepresentation. It includes the fact that the negligent misrepresentation can be seen when a statement is made without proper reasonable ground of beliefs. It is regarded as the critical duty of the convicted to demonstrate that they had reasonable ground for taking the fact to be true to the opponent. The Misrepresentation Act includes mainly six sections. Each of these sections focuses on certain kind of misrepresentation. The description is made in the following paragraph⁴.

The section 1 of this act says it that when a person has encountered a contract on the basis of misrepresentation, then he has full right to rescind the contract. The section 2 (1) suggests it that fraudulent misrepresentation encounters a loss for the claimant. On the contrary section 2 (2) focuses on the fact that affected individual has proper rights to rescind the contract. This occurs when the representation can be anything other than fraudulent. Section 3 of this act shows it that when a contract has excluded or limited liabilities, then misrepresentation may not happen. Besides, this section critically emphasises on providing greater protection to the parties⁵. It gives an understandable provision to face the questionable motives in order to represent the fact they have encountered. The section 5 of this act states that this act is not applicable to the breaching of sales contract that have occurred before the cat has passed. Lastly, the section 6 of the act shows it that this act is not applicable for the jurisdictions of Scotland and Northern Ireland.

It has been seen that when a person has entered into a contract after misrepresentation by another party, it results into a certain amount of loss. Besides, if the person makes misrepresentation he would be subjected as liable to damages as the misrepresentation was made fraudulently⁶. The convicted person has been subjected to misrepresent the contract unless he proves that he had reasonable field to believe and made the opponent understand that the facts represented were true.

Legislation that is breached

In the concerned case study it has been seen that Hedley had lost £17000 for the negligence of the bank in order to collect information about the financial status of his customer Easipower. Along with this, the Easipower bank, Heller & Partners Ltd argued on the fact that the duty of care was not mentioned throughout the statement and the liability was critically excluded. The English Tort Law was subjected to be breached in this case as here pure economic loss occurred to Hedley Byrne. In this respect, the duty of care and liability for negligence are two critical areas that are severely breached. Moreover, the duty of care includes two key factors such as control over situation and the assumed risks⁷. Throughout the case study it has been seen that the bank had created its own risks by taking the duty from Hedley to check the financial status of Easipower from Heller & Partner Ltd. Hedley was subjected to loss £17000 for having wrong information and this was created due to the negligence to perform critical responsibilities.

The whole case study shows that breach of duty is occurred due to immense negligence of the bank. A great economic loss has occurred as a result of negligent act and the same has happened to Hedley Byrne. The case study of Old Gate Estates Ltd v Toplis & Harding & Russell shows it that the liability in negligence has also occurred in this respect⁸. It has mentioned that a block of flats were purchased by the promoter of the claimant’s company. In future when the company was undergone through promotional period, the promoter had engaged a member of the opponent firm. He thought that it may be helpful to develop the value of his flats. It has also been seen that the value was too high as the net payable amount was not correctly provided to the valuer by the claimant. Thereby, the company had faced sought damages due to presence of negligent valuation. This shows that here the duty of care in negligence is violated and the contract was not reliably made between the valuer and the promoter.

On the other hand, it has been seen that in case study of Anns v Merton London Borough Council, the critical situation is created when the local authority had approved plans for a flat but that was built later⁹. It has been seen that the starting of structural movement in 1970 caused cracking to the walls and the other structural components. Thereby, the properties had become unfruitful. In the case study, it has been demonstrated that the claimant tenants of the flat had exclaimed that the council was breaching their duties due to negligence. Moreover, they had also said it that the council had not performed their duties related to the proper inspection of building walls which can help them to be sure about the correctness of depths mentioned in the plan. Thus it is clear that these case studies clearly show the breaching of duty of care. Hence it is clear that the breaching of the duty of care leads to higher level of negligence¹⁰.

Section of misrepresentation act that is breached

The concerned case study between Hedley Byrne v Heller shows that at the end Hedley were affected by the opponent and lost £17000 due to breaching of duty of care. In this regard, it can be stated that the Misrepresentation Act 1967 [section 2 and section 3] were breached. The section 2 of the concerned act focuses on the fact that in case of fraudulent misrepresentation, the affected individual can claim for damages until the opponent has made a field to believe them¹¹. Moreover, it emphasises on the compensation related to proper solutions that can be given to the affected individual¹².

Section 3 of the concerned act suggests it that excluding or limiting liabilities is not granted for making an effective contract between two parties. Hence it is helpful to incorporate greater levels of protection to them as well as include some kind of questionable motives to develop the pattern of representation. In the concerned case study of Hedley Byrne v Heller, these two sections of the Misrepresentation Act 1967 are breached. Hedley were subjected to fraudulent misrepresentation on the part of Heller & Partners Ltd. they had mentioned that Easipower was good for ordinary business but not clearly mentioned it that whether they would be able to spend the huge amount of money for having the order. Hence, it has been see that the opponent did not create any valid ground to prove them to be true. Thus the section 2 of the particular law is breached.

On the contrary, it is clearly demonstrated that liabilities are neglected at an extreme level. The Heller & Partners Ltd did not take the fact that they are responsible for the economic loss. Thus the section 3 is breached of the Misrepresentation Act 1967.

Decision taken by court

In the concerned case study it has been seen that Hedley lost about £17000 for the breaching of contract by the opponent party namely Heller & Partners Ltd. Their opponent clearly denied that the duty of care was not subjected to the statement of agreement. Along with this, liability was also excluded. The court had observed that the relationship between the two parties was proximate sufficiently which can create a duty of care. It had been found to be reasonable for the parties to know and analyse the information that they already had with them while making the contract. The judge had said it that the “special relationship” between the defendant parties needs to take proper care to avoid any kind of negligence related to maintenance of liability¹³.

Besides, it was proved that the disclaimer was able to discharge any kind of duty made up of Heller’s actions. At the end of the judgement Hedley’s claim was failed. The house of Lords was focused to implement rules for pure economic loss. It was also been said that the following four conditions can be arise anytime that are related to economic loss. The conditions are such as the presence of fiduciary relationship based on trust and confidence between the opponent parties and the pre availability of information that are helpful to assume the risk voluntarily¹⁴.

On the other hand, the presence of reliability of the information provided by one the parties and maintaining reasonability of the reliance in similar circumstances are critically essential for analysing the cases related to economic loss¹⁵. The judgment was gone on the fact that the bank disclaimed the assumptions of duty of care. Moreover, the judgement focused on the fact that any of the concerned parties have no right to accept the reply that is given with a stipulation and hence, they cannot deny the stipulation. As a whole, it may be stated as that the changing of words were not sufficient to make the contract and this leads to exclude liabilities for negligence.

Decision taken by court in presence of the act

The incorporation of Misrepresentation Act 1967 can be helpful to make proper judgment on the case between Hedley Byrne v Heller. The section 2 and section 3 are essential to be focused immensely for taking appropriate decisions over the particular matter. It has been seen that Hedley Byrne has got no proper results from the judgment. The implementation of section 2 can be helpful to take steps when fraudulent misrepresentation is present. In this case study, it has been seen that the Hedley’s bank had encountered fraudulent misrepresentation along with negligence of duty of care. Section 2 of the act emphasises on diminishing the effects of misrepresentation for solving a critical case study as the concerned one.

On the other hand, it can be stated that the decision taken by the court can be fruitful if the section 3 of the Misrepresentation Act 1967 is taken into consideration. It focuses on maintaining proper liability while making a contract. The case study shows it that proper liability was not maintained from the part of Heller & Partners Ltd. the court can take steps for analysing the questionable motives of the convicted before the initiation of judgement.

For example, the case of Smith v Eric S Bush [1990] shows that the surveyors, Eric bush had disclaimed his responsibilities to the purchaser related to the inspection 242 silver road¹⁶. The building society had a critical clause in their mortgage agreement which said that no essential repairs were needed. In future, it was seen this agreement was not true. Mrs Smith had believed on the agreement and found it that there were a lot of damages of the house. In this respect, the Misrepresentation Act 1967 was involved to make proper judgement over the particular matter. The section 3 of this act focuses on limiting liabilities that arise out of misrepresentation¹⁷. Thereby, the judgement was gone for the side of Mrs Smith emphasising the development of liabilities while making a contract.

Justification of the decision

The involvement of the section 2 and section 3 of Misrepresentation Act 1967 are helpful to make proper judgment of the cases where the liabilities of contract are violated along with negligence of duty of care. The concerned case study of Hedley Byrne v Heller & Partners Ltd. shows it that Hedley did not get proper judgment and the judge took the side of the bank as they mentioned it that they will not be responsible for the information regarding the economic status of Easipower. For example, the case study of Bisset v Wilkinson includes a scenario which states that the plaintiff had purchased land for sheep farming for opponent¹⁸.

It was previously mentioned that the land was able to carry 2000 sheep. In this case, both of the parties knew that the defendant had not been subjected to carry on sheep farming on land. In order to make proper judgement the judge made the comment that in such kind of cases the defendants must not claim anything which are said by Plaintiff related to the carrying capacity of the land. Besides, he would also say that the defendant or plaintiff needs not to say anything more than his opinion to this particular matter. In this regard, the implementation of Misrepresentation Act 1967 becomes effective to analyse the actual mode of misrepresentation in absence of fraud. It has also been mentioned that the purchaser had no right to rescind the contract when there is no fraud party.

Similarly, the concerned case study of Hedley Byrne v Heller & Partners Ltd can effectively rely on the act to understand the mode of misrepresentation. The Heller & Partners Ltd demonstrated through the letter that the Easipower could be good for ordinary business engagement. The Hedley had made a contract of about £17000; hence they faced a huge loss. It clearly demonstrates a case of misrepresentation. The Misrepresentation Act 1967 [section 2 and section 3] appeared to be beneficial for making proper judgment against Heller & Partners Ltd. Thus the damages occurred to Hedley can be explained in a better manner by using the section 2 as it focuses on the liabilities for making an effective contract.

Impact of the decision

Incorporation of Misrepresentation Act 1967 [section 2 and section 3] can be helpful to influence the terms and conditions while making a contract. Moreover, the terms of liabilities are given immense importance through the implementation of this act. It is regarded as critically important to meet the requirements of both the defendants to make a successful contract¹⁹. Application of this act becomes beneficial to reduce the rate of economic damages. Along with this, it is helpful to provide protection to the consumers by providing support through compensation.

Implementation of this act basically focuses on avoiding of provision which excludes liability for misrepresentation. Moreover, the act affects on the fact that when a representee is subjected to adopt a contract or involve willingness to continue with the conditions of the contract, he or she needs to be properly aware about the misrepresentation, otherwise it may lead to lose the rights to rescind²⁰. The Misrepresentation Act 1967 [section 2 and section 3] greatly affect the perspectives of restoration of defendant parties to the pre contractual position. In this regard, the application of this particular act can be appeared as advantageous to reduce the stress of misleading in the particular case study between Hedley Byrne v Heller & Partners Ltd. Besides, it is helpful to focus on the duty of care which minimises the rate of negligence to fulfil a particular contract.

Conclusion

Thus it can be concluded that the concerned case study of Hedley Byrne v Heller & Partners Ltd critically need the proper implementation of the Misrepresentation Act 1967 [section 2 and section 3]. In the case study it has been seen that Heller’s bank had announced that Easipower were quiet good for ordinary business engagement. Thereby, Hedley were subjected to lose a huge amount for making contract with them. Besides, the contract excludes the terms and conditions that are related to liabilities.

Upon discussing the actual occurrence along with the mode of judgement it can be stated that involvement of Misrepresentation Act could be greatly beneficial for making an appropriate judgment over the particular case study. Incorporation of this act immensely emphasise on the terms of liabilities which can be helpful for Hedley to have compensation for his huge loss. Thereby, a number of similar case studies are taken into consideration and proper discussion is made on the mode of judgement. Lastly, the impact of the concerned act are analysed in relations to the case study of Hedley Byrne v Heller & Partners Ltd.

Reference list

Andrews, Neil. “Misrepresentation and Coercion.” (2016). In Arbitration and Contract Law, pp. 189-203. Springer, Cham.

Campbell, Ian David. “The absence of negligence in Hedley Byrne v Heller.” (2016). Law Quarterly Review 132, no. 2. 266-277.

Davies, Paul S. “Rescission for Misrepresentation.” (2016). The Cambridge Law Journal 75, no. 1, 15-17.

Hoggard, N. “The law of misstatements: 50 Years on from Hedley Byrne v Heller. K Barker, R Grantham And W Swain (eds) Hart Publishing 2015 ISBN: 978 1849468633.” (2016). Journal of professional negligence. 32, no. 2, 178-181.

Hudson, Alastair. Understanding Company Law. (2017). Abingdon: Routledge,

Ikejiaku, Brian. “The recent global financial crisis: delinking security-protectionism and relinking fraudulent misrepresentation in MNCs and the global market-contending existing issues in international law and international relations.” (2017). Comparative and International Law Journal of Southern Africa50, no. 3, 442-467.

Klement, Alon, Zvika Neeman, and Yuval Procaccia. “Consumer Fraud, Misrepresentation and Reliance.” (2018). International Review of Law and Economics 54, 95-105.

Krause, Joan H. “Reflections on Certification, Interpretation, and the Quest for Fraud That Counts under the False Claims Act.” U. Ill. L. Rev. (2017): 18-28.

Legislation.gov.uk (2019). Misrepresentation Act 1967. Available at: https://www.legislation.gov.uk/ukpga/1967/7 [Accessed on 8th march 2019]

Mugarura, Norman. “The Law relating to syndicated agreements and its application in commercial practice.” (2016). Journal of Financial Regulation and Compliance 24, no. 2, 177-196.

Robertson, Andrew, and Julia Wang. “The Assumption of Responsibility.” (2016). The Law of Misstatements 50, 95-115.

Šírová, Lucia. “Misrepresentation under English Contract Law and Its Comparison to Slovak Contract Law.” (2016). International and Comparative Law Review 16, no. 2, 197-208.

Ter Haar, Roger. Remedies in misrepresentation law. Informa Law from Routledge, (2017).

Trivedi, Rita. “Restoring a Willingness to Act: Identifying and Remedying the Harm to Authorized Employees Ignored under Hoffman Plastics.” (2017). U. Mich. JL Reform 51, 357-364.

Williamson, Stephen D. “Low real interest rates, collateral misrepresentation, and monetary policy.” (2017). American Economic Journal: Macroeconomics 10, no. 4, 202-233.

Case studies

Anns v Merton London Borough Council [1978] AC 728

Bisset v Wilkinson [1927] AC 177

Hedley Byrne & Co Ltd v Heller & Partners Ltd (1964) AC 465

Old Gate Estates Ltd v Toplis & Harding & Russell [1939] 3 All ER 209

Smith v Eric S Bush (A Firm) [1990] UKHL 1 (20 April 1989)

 

 

Looking for best Law Assignment Help. Whatsapp us at +16469488918 or chat with our chat representative showing on lower right corner or order from here. You can also take help from our Live Assignment helper for any exam or live assignment related assistance