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Morgan Crucible Co v Hill Samuel & Co [1991] Ch 295.

DUTY OF CARE

Facts

The plaintiffs were bidding to take over a third party company, which was being advised by the defendants. During the bidding process, the defendants made a number of negligent misrepresentations to the third party company, which resulted the plaintiffs suffering a loss. The plaintiffs sought to recover their losses from the defendants in the tort of negligence, arguing that despite the absence of any contractual relationship, they were owed a duty of care by the defendant advisers. 

Issue

The issue was whether a party advising a company owed a duty of care to other companies (with whom those receiving the advice subsequently dealt) to ensure that the advice provided was accurate.

Held

The Court of Appeal held that a duty of care did exist on the facts of the case. Key features which were relevant in determining the existence of a duty of care were the fact that the plaintiff’s identity and the nature of their business/ transaction with the third party company was known to the defendant at the time the advice was provided.

However, the Court also suggested that in such a case the bar below which conduct will be considered ‘negligent’ is relatively low. It is not sufficient to show that the information was misleading or highly misleading, as the defendants should not be treated as having warranted the accuracy of the information. Rather, it is necessary to demonstrate that they failed to exercise due care.


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