Economics Paper on Duty of Care Concerning Pure Economic Loss

Economics Paper on Duty of Care Concerning Pure Economic Loss

Pure economic loss due to a negligent misstatement was the outstanding issue in the Hedley Byrne & Co Ltd v. Heller and Partners Ltd (1964) AC 465 case. Hedley was a company seeking advice from Heller since it felt the need to expand its credit to a customer, Easipower. Heller felt that it was appropriate for Hedley and Easipower to engage in a new business contract. However, after some time, Easipower was out of business prompting Hedley to sue Heller due to financial losses it incurred (Gordon). From the case, the most crucial question to ask is whether Heller owed Hedley a duty of care, hence this paper’s evaluation of duty of care concerning pure economic loss based on the case.

After a lengthy analysis by the House of Lords in the proceedings, the court dismissed the case as it lacked duty of care based on the facts presented. It found out that the advice Heller had given their client had an exclusion clause, which was viable. As per the law, all professionals and experts in various fields are held to a higher standard of care especially towards their clients. Basing on these arguments it is fair and just for the courts to hold a professional to the standard of reasonable professional because it helps to avoid negligence liability that is considered undesirable or not good for business contracts and engagements. Moreover, the final verdict in the Hedley Byrne v. Heller’s case was fair because the facts of the case maintained the exception to the rule of negligence as there was no duty of pure economic loss. The ratio of the verdict relied on the duty of care to arise for careless statements that lead to economic losses.

Concisely, it is appropriate for all professionals and experts in various fields to be held to a higher standard of care. This enhances not only professionalism but helps reduce negligence exhibited in these fields.


Works Cited

Byrne, Hedley, and Co Ltd v Heller. “Partners Ltd [1964] AC 465.” HL 197.223: 649.

Gordon, D. M. “Hedley Byrne v. Heller in the House of Lords.” U. Brit. Colum. L. Rev. vol. 2, 1964, p. 113.