BTC1110 Study Guide - Final Guide: Misrepresentation, Contributory Negligence
15 Jun 2018
School
Department
Course
Professor
Professional Negligence
The first question is if there was a special relationship between A and B?
The test of reasoale foreseeaility uder the eighour test fro Dooghue v Steveso is t suffiiet i this
issue
A special relationship arises when a person gives information or advice, whether the info is actively sought or merely
accepted by the other person upon a serious matter. The relationship arises if the speaker realises or ought to realise
that they are being trusted or relied upon, particularly if they have access to information or expertise on the matter.
And it was reasonable for the advised to act/rely on the advice. Then, the speaker, in choosing to give info and
advice, comes under a duty to provide it with reasonable care
Hedley Byrne v Heller (362) – a duty of care exists provided there is a special relationship based on some element of
reliance. Limitation clause - confidential, for private use & without responsibility on part of the bank
Shaddock v Parramatta City Council – Shaddok suffered pure eooi loss as a result of the Couils failure to
disclose the info
San Sebastian v Minister – S failed to establish that M made the representations with the intention of inducing the
developers to act in reliance on the representation
1) Was the advice given in respect of a serious or business matter?
2) Were the circumstances such that the adviser should have realised that the defendant was being trusted to
give correct advice?
3) Under the circumstance, was it reasonable for the advised to have relied on the advice?
Consider the indeterminacy of timing, loss and possible plaintiff
Three Parties Case
The court is cautious to find a duty of care in negligent misstatement cases where the statement causes pure
economic loss. This is because the problem of indeterminacy, as expressed in Ultramares, particularly where the
plaintiff is not in a direct relationship with the defendant, but a third party.
The situation is complicated when A has no relationship with B. This is a three party scenario and it is clear the courts
are reluctant to say a duty of care exists except in exceptional situations
Esanda Finance v PMH – 366
D owes no duty of care unless:
• D knew or ought to have known that the information or advice would be communicated to the P individually
or as a member of a class to which P belongs (e.g. investors or shareholders)
• For a purpose that would be very likely to lead the plaintiff to enter into a transaction of the kind P did enter
into
• In reliance on the information or advice and thereby
• Risk incurring the economic loss if statements were untrue
Mere knowledge that someone might see the advice and act on it is not enough
Need the intention to induce
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Document Summary
The test of reaso(cid:374)a(cid:271)le foreseea(cid:271)ility u(cid:374)der the (cid:858)(cid:374)eigh(cid:271)our test(cid:859) fro(cid:373) do(cid:374)oghue v steve(cid:374)so(cid:374) is (cid:374)t suffi(cid:272)ie(cid:374)t i(cid:374) this issue. A special relationship arises when a person gives information or advice, whether the info is actively sought or merely accepted by the other person upon a serious matter. The relationship arises if the speaker realises or ought to realise that they are being trusted or relied upon, particularly if they have access to information or expertise on the matter. And it was reasonable for the advised to act/rely on the advice. Then, the speaker, in choosing to give info and advice, comes under a duty to provide it with reasonable care. Hedley byrne v heller (362) a duty of care exists provided there is a special relationship based on some element of reliance. Limitation clause - confidential, for private use & without responsibility on part of the bank.
