‘In the light of this disagreement between judges of the TCC it is impossible to be confident as to the present state of the law. The central disagreement centres on the extent (if any) to which the making of a contract in itself gives rise to an assumption of responsibility within the meaning of Henderson v Merrett. It is difficult to disagree with the view that a contract which stipulates that the contracting party will perform certain services involves an assumption of responsibility which will normally be relied upon by the other contracting party. On the other hand it is true that the authorities prior to Henderson v Merrett, and in particular Murphy, did not envisage a builder (or possibly a builder –designer or a pure designer and supervisor of work) owing duties of care in respect of economic loss. This difference of view requires a reconciliation of these two different streams of authority which will have to await a decision from the Court of Appeal or the House of Lords.’
‘I see no reason, in logic or on practical grounds, for putting any such limitation on the scope of the right. It would, I think, be an undesirable development in the law if such an artificial distinction, for which no sound reason can be put forward, were to be held to exist. In my judgment the plaintiffs were entitled here to have judgment entered in their favour on the basis of tortious liability as well as on the basis of breach of contract, assuming that the plaintiffs had established a breach by the first defendant of their common law duty of care owed to the plaintiffs. I have no doubt that it was the duty of the first defendant, in the circumstances of this case, including the fact of the joint responsibility which they undertook in arranging for the erection of this house on this site, apart altogether from the contractual warranty, to examine with reasonable care the land, which in this case would include adjoining land, in order to see whether the site was one on which a house fit for habitation could safely be built. It was a duty owed to prospective buyers of the house. How wide or deep the examination had to be, to comply with the duty, would depend on the facts of the particular case, including the existence and nature of any symptoms which might give cause for suspecting the possibility of instability. It is clear from the facts found by the judge that, if he had thought that a finding of tort was procedurally permissible, he would have held, on his assessment of the evidence, that the first defendants were in breach of that duty. Accordingly, I would accept the cross-notice and would direct that judgement be entered for the plaintiffs against the first defendants for the tort of negligence as well as for the breach of contract.’
‘The liability in tort of the developers was held to arise from breach of a duty corresponding to that which they had assumed to the plaintiffs in contract. This I regard as of no present relevance [to the instant case]’
‘My Lords, I confess to the greatest difficulty in reconciling [the decision against the builder] with any previously accepted concept of the tort of negligence at common law and I share the doubt expressed [by Lord Bridge] whether it was correctly decided, at any rate so far as the liability of the builder was concerned. The case was however one in which the builder and the developer, with whom the plaintiffs had a direct contractual relationship, were throughout acting closely in concert, and it may be that the actual decision, though not argued on this ground, can be justified by reference to the principle of reliance established by the decision of this House in Hedley Byrne v Heller’
‘From these statements, and from their application in Hedley Byrne, we can derive some understanding of the breadth of the principle underlying the case. We can see that it rests upon a relationship between the parties, which may be general or specific to the particular transaction, and which may or may not be contractual in nature. All of their Lordships spoke in terms of one party having assumed or undertaken a responsibility towards the other. On this point, Lord Devlin spoke in particularly clear terms in both passages from his speech which I have quoted above. Further, Lord Morris spoke of that party being possessed of a ‘special skill’ which he undertakes to ‘apply for the assistance of another who relies upon such skill’
‘The principle has been expressly applied to a number of different categories of person who perform services of a professional or quasi professional nature, such as bankers; solicitors; surveyors and valuers; and accountants. … For my part I can see no reason why a duty of care should not likewise be owed by managing agents at Lloyd's to a name who is a member of a syndicate under the management of the agents. Indeed, as Saville J and the Court of Appeal both thought, the relationship between name and managing agents appears to provide a classic example of the type of relationship to which the principle in Hedley Byrne applies. In so saying, I put on one side the question of the impact, if any, upon the relationship of the contractual context in which it is set. But, that apart, there is in my opinion plainly an assumption of responsibility in the relevant sense by the managing agents towards the names in their syndicates. The managing agents have accepted the names as members of the syndicate under their management. They obviously hold themselves out as possessing a special expertise to advise the names on the suitability of risks to be underwritten; and on the circumstances in which, or the extent to which, reinsurance should be taken out and claims should be settled. The names, as the managing agents well knew, placed implicit reliance on that expertise, in that they gave authority to the managing agents to bind them to contracts of insurance and reinsurance and to the settlement of claims. I can see no escape from the conclusion that, in these circumstances, prima facie a duty of care is owed in tort by the managing agents to such names. To me, it does not matter if one proceeds by way of analogy from the categories of relationship already recognised as falling within the principle in Hedley Byrne or by a straight application of the principle stated in the Hedley Byrne case itself. On either basis the conclusion is, in my opinion, clear. Furthermore, since the duty rests on the principle in Hedley Byrne, no problem arises from the fact that the loss suffered by the names is pure economic loss.’
‘Yet the law of tort is the general law, out of which the parties can, if they wish, contract; and, as Oliver J demonstrated, the same assumption of responsibility may, and frequently does, occur in a contractual context. Approached as a matter of principle, therefore, it is right to attribute to that assumption of responsibility, together with its concomitant reliance, a tortious liability, and then to enquire whether or not that liability is excluded by the contract because the latter is inconsistent with it. This is the reasoning which Oliver J, as I understand it, found implicit, where not explicit, in the speeches in Hedley Byrne. With his conclusion I respectfully agree. But even if I am wrong in this, I am of the opinion that this House should now, if necessary, extend Hedley Byrne to its logical conclusions so as to make it clear that a tortious duty of care may arise not only in cases where the relevant services are rendered gratuitously, but also where they are rendered under a contract. This indeed is the view expressed by Lord Keith of Kinkel in Murphy v Brentwood[1991] 1 AC 398 at 466, in a speech with which all the other members of the Appellate Committee agreed. … My own belief is that, in the present context, the common law is not antipathetic to concurrent liability, and that there is no sound basis for a rule which automatically restricts the claim to either a tortious or a contractual remedy. The result may be untidy but, given that the tortious duty is imposed by the general law, and the contractual duty is attributable to the will of the parties, I do not find it objectionable that the claimant may be entitled to take advantage of the remedy which is most advantageous to him, subject only to ascertaining whether the tortious duty is so inconsistent with the applicable contract that, in accordance with ordinary principle, the parties must be taken to have agreed that the tortious remedy is to be limited or excluded. … It follows that an assumption of responsibility coupled with the concomitant reliance may give rise to a tortious duty of care irrespective of whether there is a contractual relationship between the parties, and in consequence, unless his contract precludes him from doing so, the plaintiff, who has available to him current remedies in contract or tort, may choose to remedy which appears to him to be the most advantageous.’
‘A skilled contractor undertaking maintenance work to a building assumes a responsibility which invites reliance no less than the financial or other professional adviser does in undertaking his work. The nature of the responsibility is the same although it will differ in extent.’
‘There being no evidence of any contractual exclusion clause which sought to exclude liability in tort, the case has proceeded on the basis that, had there been no change in ownership, the builders would have been liable to the original owners both in contract and in tort: Henderson v Merrett. Contract is irrelevant for present purposes, but it is significant that the builders are assumed liable to the original owners in tort for damage to the building. The result of the judge’s holding is that, although the builders were under a duty owed to the original owners to build the wall in such a way that it contained any fire for a certain period and although they broke that duty, the original owners can not sue because they have suffered no damage and the subsequent owners cannot sue because the duty owed to them only extends to chattels in the building and not to the building itself. Whatever the justification is for coming to that result it can not be either a desire not to increase the degree of care which the builders would need to exercise when building the wall or a desire not to increase the exposure of the builders to damages greater than those to which they would have been exposed had there been no change in ownership. As I have already indicated, had there been no change of ownership the builders would have been liable in tort for the damage to the building.’
‘It is these difficulties which I think justify the policy which prevents recovery in tort against the builder in this case for defects in the building which have caused damage to it. I do not think it is an answer to say that the original contracting party may be owed a concurrent duty in tort by the builder and so why should the same duty not be owed to his successor in title? This is still an undeveloped area of the law and in practice the builder may well be able to exclude such liability by his contract.’
‘There is a blurred borderline between architectural design and the construction details needed to put it into effect. Borderlines of responsibility cannot be defined in the abstract. A carpenter's choice of a particular nail or screw is in a sense a design choice, yet very often the choice is left to the carpenter and the responsibility for making it merges with the carpenter's workmanship obligations. In many circumstance, the scope of an architect's responsibility extends to providing drawings or specifications which give full construction details. But responsibility for some such details may rest with other consultants, e.g. structural engineers, or with specialist contractors or subcontractors, depending on the terms of their respective contracts and their interrelationship. As with the carpenter choosing an appropriate nail, specialist details may be left to specialist subcontractors who sometimes make detailed "design" decisions without expecting or needing drawings or specifications telling them what to do. In appropriate circumstances, this would not amount to delegation by the architect of part of his own responsibility. Rather that element of composite design responsibility did not rest with him in the first place.’
‘As I have already indicated I agree with Judge Hicks that a person who has undertaken to provide a design may owe a duty, concurrently with any contractual duty, to use due care and skill not to cause economic loss (although in my view in the absence of special circumstances the economic loss will be limited in extent to that in Murphy). However whilst I also agree that there should be no distinction turning not on the content of the duty but the trade or profession of the person undertaking it, when one takes into account the policy considerations that led to Murphy and Bates such an approach points in the opposite direction to that endorsed by Judge Hicks.’
‘In my judgement Murphy and Bates established that, as a matter of policy, any person undertaking work or services in the course of a construction process is ordinarily liable only for physical injury or for property damage other than to the building itself but is not liable for other losses – i.e. economic loss. If any liability for such economic losses to arise it must be for other reasons, e.g. as a result of advice or statements made upon which reliance is placed in circumstances which create a relationship where there is in law to be an assumption of the responsibility for the loss – i.e. within the principle of Hedley Byrne v Heller (see Lord Keith's speech in Murphy which I have quoted above). In my judgment a designer is not liable in negligence to the client or to a subsequent purchaser for the cost of putting right a flaw in a design that the designer has produced that has not caused physical injury or damage, just as a contractor is not liable.’
‘It is not a part of the reasoning of my finding, but in relation to the distinction between builder and designer it is right to note that a builder warrants that its works will be fit for the purpose, see Young and Marten v McManus Childs[1968] 9 BLR 77 , whereas a professional adviser warrants only that he will exercise reasonable care and skill.’
‘I differ from the analysis of Judge Lloyd [in Payne v Setchell] with great hesitation, but I have to say that it does not seem to me that Murphy v Brentwood and the other authorities to which he referred do establish the proposition that a builder never owes a duty of care which extends to not causing economic loss, only that he does not do so in the absence of ‘a special relationship’
‘The actual principle relevant to this part of my consideration laid down by the decision in that case, in my judgment, was, quite simply, that where, by contract, a party has agreed personally to do something and it is an express or implied term of the contract that that thing will be done with reasonable care and skill, the party owes to other relevant contracting parties the like duty of care in tort unless the existence of such duty of care is excluded or modified by the contract. Exceptionally, as on the particular facts of that case, but not usually, such a duty of care might be owed to a person higher up a chain of contracts than those immediately party to the relevant contract. The House of Lords was not concerned in that case to broaden the nature or scope of duties of care, so as to impose a duty of care upon a person in relation to something actually done by someone else, but simply to make plain that it was no answer to the suggestion that a party should be able to sue in negligence another party who had failed to exercise reasonable care and skill in doing something that had thereby caused the first party loss, to contend that the parties were in a contractual relationship and that their mutual rights and obligations should be determined exclusively under their contract.’
‘37. There is, at any rate at first sight, attraction in the notion that, where, in a purely commercial context, parties have voluntarily and consciously arranged their affairs so that there is a contractual obligation on A to give advice to B, and on B to consider and pass on that advice, to the extent that it sees fit, to C, there should normally be no part for the law of tort to play. In other words, that (i) there should be no tortious duty in relation to the advice, either as between A and B or as between B and C, because those parties have identified the extent and ambit of the respective rights and duties between them in their respective contracts; (ii) there should be no tortious duty in relation to the advice given by A, as between A and C, because the three parties have intentionally structured their relationships so that there is no direct duty between A and C, but separate duties between A and B, and between B and C. 38. The justifications for each of these two points might appear to be the converse of each other. Point (i) is based on the contention that the raising of a tortious duty is inappropriate because the parties have agreed a contractual duty. Point (ii) is based on the contention that the raising of a tortious duty is inappropriate because the parties have decided that there should be no contractual duty. However, as I see it, despite this apparent paradox, both points essentially rested on the same proposition, namely that a tortious duty should not be invoked between parties to commercial contracts at least where there is no ‘liability gap’. 39. In relation to point (i), it would be surprising (save perhaps in unusual circumstances) if the law of tort imposed greater liability on A or B than they had agreed to accept, either expressly or impliedly, in their respective contracts, and it might appear pointless and confusing if there was a tortious liability which was simply co-extensive with the contractual liability. Of course, tortious liability is generally subject to less strict statutory limitation bars that contractual liability (as is demonstrated in the Henderson case at 174 F-G), but that may seem a questionable reason, in terms of principle, for justifying a co-extensive tortious duty where there is a contractual duty. … 42. On the other hand, there are strong countervailing arguments the other way, which appear to me, equally, to apply equally to points (i) and (ii). If a duty of care would otherwise exist in tort, as part of the general law, it is not immediately easy to see why the mere fact that the adviser and the claimant have entered into a contract, or a series of contracts, should itself be enough to dispense with that duty. If a claimant is better off relying on a tortious duty, it is not readily apparent why a claimant who receives gratuitous advice should be better off than a claimant who pays for the advice (and therefore would normally have the benefit of a contractual duty), unless, of course, the contract so provides. One might expect the question to be determined by reference to the contractual relationship on the normal basis, namely whether the nature, terms or circumstances of the contracts expressly or impliedly lead to the conclusion that the parties have agreed that there will be no tortious duty. 43. These arguments have to be assessed in the light of the decision of the House of Lords and, in particular, the analysis of Lord Goff, in the Henderson case. It seems clear from the closely reasoned passage in his speech at 184B to 194E that the issue has been resolved, at least in principle, in favour of the latter of the two views that I have summarised. In other words, "the common law is not antipathetic to concurrent liability"… … 45. At 193B to C, Lord Goff said ‘the law of tort is the general law out of which the parties can, if they wish, contract’, and that the correct approach is to determine whether there would otherwise be a tortious liability arising out of an assumption of responsibility and concomitant reliance, and ‘then to enquire whether or not that liability is excluded by the contract because the latter is inconsistent with it’. … 47. Thus, the question in a point (ii) case, as in a point (i) case, is whether, in relation to the advice which he gave, the adviser assumed responsibility to the claimant, in the light of the contractual context, as well as all the other circumstances, in which the advice was given. The way in which Lord Goff expressed himself in more than one place in his speech in the Henderson case, including some of the brief passages I have quoted, suggests that it is for the adviser to establish that the contractual context negatives an assumption of responsibility, not for the claimant to show that the assumption survives notwithstanding that context. 48. Like Longmore LJ, I do not think that the answer depends on whether one asks first whether, absent the contractual context, there would be an assumption of responsibility, and secondly whether the positive answer to that question is vitiated by the contractual context; or whether one asks the single question whether, in all the circumstances, including the contractual context, there was an assumption of responsibility. Whether or not one adopts the two-stage approach may depend on the facts of the particular case, or even on the way the case has been argued.’
‘I entered into an agreement on or around12 December 1991 with my wife to purchase 12 Magnolia Rise (then known as Plot 5 Magnolia Rise) from PE Jones (Contractors) Limited. The property was a new build property and was completed in April 1992.’
‘Whereby the vendor agrees to sell and the purchaser agrees to purchase all that piece or parcel of land known as plot number 5 … together with the dwelling house (hereinafter called the house) now standing on the said land which said land and house are together hereinafter referred to as the property. 1. The purchase price shall be the sum of£351,700 . 2. A deposit of£35,170 shall be paid … on signature of this agreement. … 6.1. Compilation shall take place … 14 days after the issue by the vendors to the purchaser of written notice that the property is complete and ready for occupation … notwithstanding the non-completion of items of a minor nature which would not normally preclude the purchaser from taking occupation … … 8 The Building Conditions annexed hereto are incorporated in this contract.’
‘1(a) The vendor will in an efficient and workmanlike manner complete the work shown on the drawings and specifications relative thereto already produced to and made available for inspection by the purchaser at the offices of the vendor with such additions variations or omissions as may from time to time be agreed in writing between the parties. … 10. The vendor and the purchaser shall forthwith enter into the National House-Building Council’s standard form of Agreement No HB5 (1986) (or any other standard form in current use at the relevant time for the like purpose) which said standard form is hereinafter called ‘the NHBC Agreement’
‘Important Notes (p5): The Buildmark is an agreement between the builder, the NHBC and each purchaser of the home. Your rights under the Buildmark are in addition to any contractual, statutory or common law rights you may have against the builder.’
‘In the case of a contract it is necessary to exclude liability for negligence, but in this case the question is whether an undertaking to assume a duty of care can be inferred: and that is a very different matter. And secondly, even in cases of contract general words may be sufficient if there is no other kind of liability to be excluded except liability for negligence: the general rule is that a party is not exempted from liability for negligence ‘unless adequate words are used’ – per Scrutton LJ in Rutter v Palmer’
‘A man cannot be said voluntarily to be undertaking a responsibility if at the very moment when he is said to be accepting it he declares that in fact he is not. The problem of reconciling words of exemption with the existence of a duty arises only where a party is claiming exemption from a responsibility which he has already undertaken or which he is contracting to undertake’
‘User’s Instructions This leaflet is intended to help you use and care for your gas fire. PLEASE READ THOROUGHLY before using the fire and keep for future reference.’
‘Thank you for choosing this Valor gas fire. This fire has been designed to give years of trouble-free service. To maintain its optimum performance advantage should be taken of the regular servicing and inspection facilities available for gas appliances. Annual servicing is recommended’
‘DEBRIS IN FLUES The opening at the back of the fire must always be kept clear of obstruction. If the chimney has previously been used for coal fires or is of the normal 9in. x 9in. construction it is possible that mortar and soot can fall to the bottom of the chimney. This in time could build up until the flue becomes restricted or even blocked. The fire should be serviced regularly in order to ensure good mechanical operation and also so that the cavity behind the fire can be inspected and if necessary cleaned out. It is important that this work should be carried out by a competent person such as a British Gas or CORGI registered installer.’
‘8.7.1 However in my opinion a visual inspection of the family room chimney flue from the builders opening and in the loft should have identified that it is not constructed in accordance with the requirements of relevant normative documents. Therefore action should have been taken at that time to remedy the situation. 8.7.2. Mr Robinson verbally confirmed to me that he could not remember the gas fires having been serviced since they were installed. Therefore there has not been an opportunity for the faults to be identified sooner.’
‘11.2 Should the fires have been serviced annually in accordance with the recommendations of CORGI/the gas board and the manufacturer's instructions, the potential faults of the chimneys would have been discovered.’