Chaudry v Prabhakar [1989] 1 WLR 29

Facts

• The claimant sought to purchase a car and asked the defendant, a friend who presented himself as knowledgeable about automobiles, for assistance.
• The defendant inspected a car displaying visible damage and advised the claimant, following only a superficial assessment, that the vehicle had not been involved in an accident.
• The defendant did not investigate the cause of the obvious damage.
• Relying on this advice, the claimant bought the car.
• It was later discovered the car was significantly unroadworthy due to substantial damage from a severe accident.
• The claimant alleged the defendant owed a duty to exercise care in giving advice and had breached that duty through negligence.
• The issue was whether a duty of care existed in this informal, non-contractual relationship where the defendant had apparent specialist knowledge and the claimant relied on his advice.

Issues

1. Whether a duty of care in tort can be established when informal advice is given by a friend with professed special knowledge, but where no contractual relationship exists.
2. Whether reliance on the defendant’s knowledge and representations in a social or friendly context suffices to create legal responsibility for negligent misstatements.
3. Whether the principles from Hedley Byrne & Co Ltd v Heller & Partners Ltd regarding negligent misstatement apply in non-professional or social settings.

Decision

• The Court of Appeal held that a duty of care did exist under the circumstances.
• The court found the defendant was aware the claimant was relying on his knowledge regarding the car’s condition.
• The fact that the defendant held himself out as knowledgeable about cars was decisive in establishing an assumption of responsibility for the advice given.
• The defendant breached this duty by failing to exercise reasonable care when providing the advice, leading to harm to the claimant.
• The ruling expanded the applicability of duty of care to situations where advice is given informally, not limited to formal professional or contractual relationships.

Legal Principles

• A duty of care in tort for negligent misstatement can arise outside formal or contractual relationships where an individual, by representing special knowledge, assumes responsibility for advice and another reasonably relies on that advice.
• The existence of a duty does not require a professional or business relationship; it may arise in informal or social contexts where the criteria of assumed responsibility and reliance are met.
• The case extends the application of principles from Hedley Byrne & Co Ltd v Heller & Partners Ltd beyond commercial transactions.
• Liability for negligent misstatement may emerge based on statements made in social settings if those statements are relied on and the maker has asserted special knowledge.

Conclusion

The Court of Appeal in Chaudry v Prabhakar [1989] 1 WLR 29 clarified that a duty of care for negligent misstatement can arise in informal, non-contractual relationships where one party claims specialist knowledge and the other reasonably relies on their advice. This expansion beyond professional settings has prompted criticism for potentially blurring the boundary between social and legal obligations, but it remains a key authority on the reach of the law of negligence.