Hedley Byrne & Co, an advertising agency, was asked by a client to arrange substantial advertising contracts. Before committing to these contracts, Hedley Byrne wanted to check the financial standing of their client, Easipower Ltd.

Hedley Byrne's bank contacted Heller & Partners (Easipower's bankers) twice seeking references about Easipower's creditworthiness. Heller provided favorable references, stating that Easipower was "respectably constituted" and "good for its ordinary business engagements." However, these references were given "without responsibility."

Relying on these references, Hedley Byrne entered into advertising contracts on behalf of Easipower. When Easipower went into liquidation, Hedley Byrne suffered substantial financial losses and sued Heller for negligent misstatement, claiming the bank should have known that Easipower was in financial difficulty.

The House of Lords recognized that the traditional rule against recovery for pure economic loss needed an exception for negligent statements. Their reasoning included:

• Special Relationship: Where parties have a special relationship based on skill, knowledge, and reliance, a duty of care can arise even for pure economic loss
• Professional Responsibility: Those who hold themselves out as having special expertise should be responsible for careless statements made in their professional capacity
• Reasonable Reliance: If it is reasonable for someone to rely on a professional statement, and the professional knows this, a duty of care should exist
• Policy Balance: The law should protect against careless professional advice while not creating unlimited liability

The court emphasized that liability would be limited to situations where there is a special relationship, preventing the "floodgates" problem of unlimited liability to unlimited classes of people.

In this specific case, however, the disclaimer "without responsibility" was effective to negate any duty of care, so Heller was not liable despite the negligent nature of their reference.

Hedley Byrne v. Heller has had profound impact on tort law and professional liability:

• Economic Loss Exception: Created an important exception to the general rule that pure economic loss is not recoverable in negligence
• Professional Liability: Established the foundation for modern professional negligence law affecting lawyers, accountants, surveyors, and other professionals
• Special Relationship Test: Introduced the concept of special relationship as a limiting factor for duty of care in statement cases
• Disclaimer Effectiveness: Confirmed that appropriate disclaimers can negate liability for negligent statements
• Influence on Later Cases: Provided the foundation for subsequent developments in negligent misstatement law

The case represents a careful balance between protecting those who rely on professional advice and preventing unlimited liability for careless statements. It remains a cornerstone of professional negligence law and is regularly cited in cases involving negligent advice or information.