The application of the ‘broad principle of Hedley Byrne’ as between parties to a contract

Abstract

In Henderson v Merrett Syndicates Ltd the House of Lords held, inter alia, that a party to a contract may rely on a tort committed by the other party, as long as doing so is not inconsistent with its express or implied terms. In doing so, it made clear (with respect, correctly) that the much-quoted passage in Lord Scarman's speech in Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank Ltd should not be interpreted as assigning to contract an domain exclusive of tort and it thereby upheld the formerly predominant view which allowed concurrence of actions in tort and contract in principle. However, in finding a duty of care on which to base the plaintiffs’ claims in tort, Lord Goff in Henderson relied on Hedley Byrne as establishing a very broad principle of liability in tort based on the defendants’ ‘assumption of responsibility’ and this principle invites a radically different treatment of the relationship between the tort of negligence and contract between parties to contracts.