Hedley Byrne and Co v Hedler and Partners (1963)

Summary
Hedley Byrne was a firm of advertising agents. Their customers, Easipower
Ltd have put a lerge order to them and they wanted to check Easipower
financial position and their credit worthiness by assessing Easipowers
bank. The bank said that Easipower is good but the statements was made
without responsibility on their part. Hedley Bryne rely on the statement
and provide the advertisement services to Easipower. However, Easipower
have gone bankrupt and Hedley Bryne had to face losses on the contract
with Easipower amounting $17,000. Hedley Bryne want to sue Easipowers
bank for the losses.

Auditors duty of care

With the respect to the auditors duty of care, it means that the auditors
actions that will cause injury to other person. In this case, Hedley Bryne
want to sue Easipowers bank because they have prepared the financial
statement report on Easipowers account. To proceed with the sueing,
Hedley Bryne have to determine the causal relationship to proof causation
between them and the act od negligence of the auditor. There are two
factor that have to be considered which are the reliance factor and the
contributory negligence. The auditor have issued a report on Easipowers
account but they do not know for what purpose the report will be used as
Hedley Bryne only want to know about Easipower credit worthiness. In
fact, Hedley Bryne only rely on the report prepared without asking for
additional information. Regarding Easipower. Although if the auditor act of
negligence, management of Hedley Bryne also neglect as they does not
ask for additional information or disclosure from the bank. Therefore, in my
opinion, Hedley Bryne can not sue Easipowers bank on the report issued
by the auditor as the auditor does not know the purpose of Easipowers
bank using their report and Hedley Bryne does not asking for further
information regarding to Easipowers accounts.