Candler v Crane, Christmas & Co

  • The accounts grossly overstated the companys assets and the accountants failed to check the title deeds
  • L Denning - the claimant should succeed because the accounts knew the investor would be relying on their work and the claimant had a right to rely on them to use propert care. He doubted whether there should be a distinction between physical and economic loss provided there was sufficient proximity.
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Assuming responsibility for words

Customs & Excise Commissioners v Barclays Bank

  • Assumption of responsibility is not the only test for the existence of a duty to prevent pure economic loss
  • If D freely takes on a responsibility to C to prevent economic loss, then the court will enforce that responsibility
  • As Barclays had received a court order, any responsibility it had was not voluntary, therefore the court had to go on to investigate other factors
  • It was not fair, just and reasonable to impose a duty on the bank to protect the commissioners from economic loss because the bank already faced possible proceedings for contempt of court if it did not comply with the order.
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The 'special' relationship

Company directors, employees and agents

Williams v Natural Life Health Foods

  • Brochures and financial projections emphasised how profitable the business was
  • Claimed the success was due to the expertise of its managing director who was involved in preparing the financial projections
  • Turnover was less than expected
  • They sued for negligence in preparing the financial projections.
  • In the absence of personal dealings with the managing director, it was not reasonable for them to rely on him

Merrett v Babb

  • The court found that the borrowers had relied on the skill of the individual surveyor who prepared the valuation, even though they had never met him and did not even know his name
  • The position of a company director was different from that of a professional in an unincorporated firm, the reasons for making such a distinction are not clear in the judgment.
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The 'special' relationship 2

Statements in pre-contract negotiations

Esso Petroleum v Mardon

  • D entered into a tenancy based on a turnover estimate which C had provided to him
  • Actual turnover was much less than expected and he made heavy losses
  • The turnover estimate was both a term of the tenancy agreement and a negligent misrepresentation
  • If the parties to a contract want to avoid this concurrent liability, they can expressly exclude it in the contract
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The 'special' relationship 3


Smith v Eric S Bush

James McNaughten Paper v Hicks Anderson

  • The defendants were entitled to expect the claimant to get further advice from its own accountants before going ahead with the takeover

Patchett v Swimming Pool

  • The website encouraged customers to make further inquiries of their own and it was not reasonable for claimants to rely purely on the site.

Goodwill v British Pregnancy

  • D could not have been expected to realise that the patient would communicate the advice to future partners or they would rely on it. Also the woman had not in fact relied on the advice in any case, she had also consulted her GP, who had correctly told her that there was a small risk that she would become pregnant
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