Research Paper
Can Banks be Held Liable for the Advice That They Give to Their Customers? Please Discuss the Case Hedley Byrne vs. Heller.
By: Carnika Moncur
Course: BUSL256-Banking Law I
Professor: Randall Dorsette
Date: November 4th, 2014 Table of Contents
Introduction……………………………………………………………………………………....3
What is Hedley Byrne?...................................................................................................................4
What is Heller?................................................................................................................................4
What is Hedley Byrne v Heller?.....................................................................................................4
Overview of Hedley…show more content… Therefore according by law, Hedley Byrne would only be compensated for their financial loss due to the reliance of Heller’s advice based on negligible statements from Heller only if a special relationship between Hedley and Heller existed. Under law, special relationship means that a duty of care could arise between the two parties only if a contractual or fiduciary relationship (a firm/person puts complete trust in another firm to make a certain decision or business transactions) exits. Listed below are other areas of how a special relationship…show more content… Borrowers can either be commercial or domestic customers of a bank, if the borrower is a domestic customer then the provisions of a Consumer Credit Act has to be followed with the bank to ensure that the customer understands what they are doing. The Consumer Credit Act also includes borrowing for a family home or commercial transactions. The bank has to ensure that they have to take care of the borrowers being independently advised correctly which is followed in the Consumer Credit Act. This requirement was known as the equality of arms which was recognized by a High Court judge which is defined as the banks’ professional advisors are equaled to the quality of advice given to the borrowers. The Consumer Credit Act is not applicable to commercial customers however the equality of arms does still exist. An example of equality of arms would be in the case of Allied Irish Banks plc v James Mansfield in which Mr. Mansfield did not understand the terms, but signed off his accounts and other important documents due to the advice of accountants and lawyers. However this case was won by the bank because Mr. Mansfield should have known what he was signing, the importance of his documents and the risks that would occur when making decisions. Therefore a special entitlement of duty of care is presented to consumers due to the Consumer Credit Act and