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When a statement of advice is to be given by one person to another, Lord Reid suggests that the adviser has 3 courses of action. They can refuse to answer, they can answer with qualification, or they can answer without qualification. In the latter case, if the person relies upon the statement, liability may result is the statement was made negligently. This is known as a case of negligent misstatement.

Policy concerns

Before we proceed to examine any cases, there are a few policy concerns associated with these types of cases, which must be considered.

  • Causation – In any negligent misstatement, the loss is due to the claimant’s acts, not the advice giver’s, therefore there must be reliance
  • “Fear of liability in an indeterminate amount for an indeterminate time to an indeterminate class” – words are more volatile than deeds, therefore we must not attach too much importance to them
  • Free riding – negligent misstatement claims can undermine contractual consideration, as in riding upon free advice, there is no consideration; this could be seen as unacceptable

Before Hedley Byrne

The case which recognised liability for negligent misstatements is that of Hedley Byrne v Heller & Partners Ltd [1964]. Prior to this case, it was necessary to show recklessness in a deceit claim. In Candler v Crane, Christmas & Co [1951] for example, accountants were ruled not to owe a duty of care in disclosing accounts to third parties, despite the possibility being created in Pasley v Freeman [1789]...

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