Key Point
- A duty of care can be owed not only to the direct recipient of the misstatement but also to a person reasonably relying upon it
Facts
- C was the subject of a very negative reference from his ex-employer D which damaged his job prospects
- C sued D in negligence
Held
- D was liable to C in negligence for the pure economic loss that C suffered
- An ex-employer owes a duty of care to its former employees when making references to prospective employers
Lord Goff
- Assumption of responsibility arises from the special knowledge that the former employer possesses of its former employee derived from its experience with him
- When former employer provides an employment reference it is not only for the assistance of the third-party recipient but also its former employee
- Furthermore, when such a reference is provided by an employer, it is plain that the employee relies upon him to exercise due skill and care in the preparation of the reference before making it available to the third party: p. 319
- Mutual Life v Evatt overruled: the skill of preparing a reference in respect of an employee falls as much within the expertise of an employer as the skill of preparing a bank reference fell within the expertise of the defendant bank in Hedley Byrne itself p. 320
Commentary
- This case is an extension of the Hedley Byrne principle as the principle only concerned duties of care owed to direct recipients of advice
- Note that D was legally obligated to provide a reference and thus the statement was not given voluntarily, however, this was not discussed
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