Introduction

Persons often enter into a contract in reliance upon advice from a third party, in particular a professional advisor, on aspects of the contract. For example, banks who lend a sum of money on the security of a mortgage over certain property often rely upon advice from a professional valuer on the value of that property, and prospective purchasers of land often rely upon advice from a solicitor on the vendor’s title to the land.

An advisor who is liable and has paid compensation may wish to recoup all or some of that compensation from the contract-partner. By the same token, a contract-partner who has paid compensation may wish to recoup all or some of that compensation from the advisor.

In Hedley Byrne & Co Ltd v Heller & Partners Ltd,¹ where the advice related to the financial stability of the advisee’s contract-partner, it was laid down that

* Some of the ideas expressed in this chapter have already been expressed in S Harder, ‘Claims between a Person Liable for Misrepresentation and the Representee’s Contract-Partner’ (2014) Journal of Business Law 121. The Journal has kindly permitted a republication of the relevant parts.

¹ Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 (HL). an advisor may be liable for a negligent misstatement even in the absence of a contractual or fiduciary relationship with the advisee. This has increased the frequency of claims against professional advisors, but the categories of case in which advisors are liable in the absence of a contractual or fiduciary relationship are not entirely settled.

This chapter considers how liability is, and should be, allocated between the contract-partner and the advisor in two categories of case. The first category (con­sidered in Section III) concerns the situation in which the advisee is claiming a contractual debt or damages for breach of contract from the contract-partner. The second category (considered in Section IV) concerns the situation in which the advisee is claiming damages from the contract-partner in respect of a pre- contractual misrepresentation. It is assumed throughout that the advisor is liable to compensate the advisee's reliance loss in contract or tort (or both).^{[984] [985] Two different liability regimes are considered for each category of case. One is the regime of joint and several liability (or ‘solidary liability' ),3 which is dominant, for example, in England and Wales, Northern Ireland and New Zealand. The other liability regime discussed is the proportionate liability regime that exists in Australia.[986] The chapter starts with a brief outline of the different ways of allocating liability between multiple debtors in general.}

II.