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Henderson v Merrett Syndicates

[1995] 2 AC 145

Case summary last updated at 19/01/2020 12:35 by the Oxbridge Notes in-house law team.

Judgement for the case Henderson v Merrett Syndicates

Ps entered a syndicate whereby Ds would manage their funds. Some contracted directly with fund managers, while others had a contract to join the syndicate and their relationship with a fund manager was through the medium of a sub-agency agreement. HL held that the more “indirect” plaintiff could still claim for tort damages as the relationship was proximate enough. 
Lord Goff: This type of relationship (investor and managing agent) is a typical circumstance where the Hedley-Byrne rules apply. The agents held themselves out as having a special skill, they knew that Ps would be implicitly relying on their advice, since Ps gave Ds the authority to take out insurance etc for them. Knowledge of reliance + special skill + relationship between D and P that is either general or specific to a particular transaction (whereby D assumes a responsibility to P) = prima facie duty of care (subject to disclaimers). He also says one can proceed either by analogy of circumstances to previous cases that come within the Hedley Byrne rules OR by principle from that case. However he asserts that “the principle extends beyond the provision of information and advice to include the performance of other services.” He acknowledges the criticism of the “assumption of responsibility” test in misrepresentation cases but says “in cases such as this” and “especially in a context concerned with a liability which may arise under a contract or in a situation ‘equivalent to contract,’” the benefit of asking whether, objectively, “responsibility should be held to have been assumed by the defendant” is that where one party assumes responsibility towards another he ought to be liable for loss flowing from it and hence, once it is established that a case falls within the Hedley Byrne principles (including assumption of responsibility), there is no need to ask whether it is fair, just and reasonable for liability to be imposed. 

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