Tort Law Coursework Example | Topics and Well Written Essays - 2500 words

Tort Law - Coursework Example Before this case, if a professional person made a statement to another, and the other person relied upon this statement, the only remedy for this would be a remedy in contract, not in tort.2 Hedley Byrne changed this basic rule, and now parties may recover for purely economic loss, even if there is not a contractual relationship. The facts in Hedley are similar to the case at bar. In Hedley, Hedley Byrne was a firm of advertising agents with a customer, Easipower Ltd., who put in a large order. Hedley carried out this large order, but not before it got a report from the Heller & Partners Ltd. Bank regarding Easipower’s creditworthiness. The bank replied that Easipower was creditworthy, Hedley relied upon this statement, gave Easipower its orders, Easipower went out of business, and Hedley Byrne lost  £17,000 on the deal. Hedley Byrne sued Heller & Partners for their statement. Heller replied that there was not a duty of care, and that liability was excluded. What the Hedley court found was that there was a special relationship between the parties, and the court found that the special relationship was formed because the defendant reasonably should have known that the plaintiff would rely upon the statements that they gave to them. This foreseeable reliance creates a special relationship. Since the decision in Hedley, the UK courts have expanded upon the definition of special relationship and what would give rise to an action in negligence, with regards to people who are professionals. For instance, 3expanded upon the Hedley principle, and stated that if something is common practice, then it is not unreasonable to rely upon the word of that professional, as opposed to being expected to get a second opinion. Moreover, the Smith case expanded the Hedley principle to third parties. However, the Hedley principle is not absolute. For instance, in Caparo Industries plc. V. Dickman4 , a company who was pursuing a takeover relied upon an auditor’s statements