Negligent misstatement (pure economic loss)

The leading authorities to know, and how the doctrine developed over time. A defendant who makes a statement may owe a duty of care in respect of pure economic loss caused by reliance on it where there is an assumption of responsibility, foreseeable reliance, and reliance was reasonable in the circumstances.

Leading cases

1. Hedley Byrne & Co Ltd v Heller & Partners Ltd (1964) [1964] AC 465, House of Lords.

   Created the special-relationship category that allows recovery for pure economic loss caused by negligent words.

2. Smith v Eric S Bush (1990) [1990] 1 AC 831, House of Lords.

   Extended Hedley Byrne to surveyors instructed by a lender but relied on by a purchaser, required reading on third-party reliance.

3. Caparo Industries plc v Dickman (1990) [1990] 2 AC 605, House of Lords.

   Refined the assumption-of-responsibility test in the auditor context and tied negligent-misstatement liability back to the three-stage duty test.

4. Spring v Guardian Assurance plc (1995) [1995] 2 AC 296, House of Lords.

   Applied the assumption of responsibility to negligent references, establishes that the doctrine reaches beyond commercial advice.