Why was Contract Thought not to be Good Enough?
I want briefly to add to what I have just said, which focused on the position of the claimant, by reversing the focus and looking at the position of the defendant. What I want to say conveniently emerges from the following hypothetical example given by Lord Devlin:
If a defendant says to a plaintiff: ‘ Let me do this for you; do not waste your money in employing a professional, I will do it for nothing and you can rely on me', I do not think he could escape liability simply because he belonged to no profession or calling, had no qualifications or special skill and did not hold himself out as having any.
The relevance of these factors is to show the unlikelihood of a defendant in such circumstances assuming a legal responsibility, and as such they may often be decisive. But they are not theoretiÂcally conclusive and so cannot be the subject of definition. It would be unfortunate if they were.[595]The process of contractual negotiation gives the party making the statement the opportunity to determine the extent of its own liability with precision according to its own preferences. One possibility is that it could agree to indemnify the stateÂment gratuitously, but this could only be done by the clearest words and would best be done backed by nominal consideration, a device which has been subject to much undeserved (as well as much deserved) criticism.[596] Can liability for negÂligent misstatement based on an assumption of responsibility which it is simply a pretence to say is voluntary, and so cannot be as fine grained as contract and must, when appellate courts shift the boundaries of negligence, periodically spring surprises of a sort the general principles of the common law of contract are an attempt to avoid, be thought to be superior to this?
The best possible justification of Hedley Byrne would be that it was a response by the law of tort to a situation in which the law of contract had proven to work unacceptably badly; an instance of, to use the welfare economics term, market failure.[597] But the comments I have made on Lord Steyn's position in Williams v Natural Life Health Foods Ltd apply equally to Denning LJ in Candler and the House of Lords in Hedley Byrne.
They did not seek to identify defects in the law of contract. Their views were too blunt to explore the possibilities of market failure in any detailed sense, but this was as well as it would be preposterous to maintain that the claimants in those cases were, or in the typical Hedley Byrne case are, ‘vulnerable' or anything other than contractually competent. This bluntness was thought good enough because it was believed that the law of contract tout court had failed. My argument has been that there is no mischief addressed in Hedley Byrne. The dog barked when there was nothing to bark at. But, of course, it was believed that there was a mischief. It was the law of contract itself.This is most apparent, of course, in those cases of concurrent liability such as Henderson v Merrett where negligence sets aside contractual limitations. I am conÂscious that I have not paid sufficient attention to the fact that Heller and Partners Ltd was not actually found liable. However, I do not propose to discuss the detailed relationship of contract and tortious liabilities as it has been developed after Hedley Byrne, for though that detail is of the greatest importance to parties in situations at wherever the boundary of negligence liability currently is drawn, it is the basic overriding of contract by tort that is of relevance here. It perhaps shows that Hedley Byrne was heard prior to Dorset Yacht that we have seen that Lord Devlin feared that it would have stretched credulity to have claimed that the defendant had voluntarily assumed responsibility for a statement which was given with a categorical express disclaimer. But, of course, the possibility of tort trumpÂing even a crystal clear expression of contractual intention was always latent in Hedley Byrne. It was not the ratio of the case, but it was, if I can put it this way, its principle. Though it is a principle which is, with respect, impossible to justify in economic terms, and, once the nature of economic action is properly understood, is therefore also unjustifiable in moral and legal terms, I think I know why that principle was advanced.
I have earlier cited Diamond's views as an illustration of the general criticism of the majority decision in Candler.[598] I was led to these views by Professor Paul Mitchell's excellent chapter on Hedley Byrne in Landmark Cases in the Law of Tort,[599] on which I have relied heavily. Those views were particularly interesting given Diamond's general stance, but also, as Mitchell leads one to realise, parÂticularly politically influential, not only because of Diamond's own eminence, but because they were the commentary on contract and tort in a very influential colÂlection published in 1963 under the auspices of the Society of Labour Lawyers: Law Reform NOW.[600] One of the editors of the collection, Gerald Gardiner QC, had led for the claimants in the Lords and was shortly to become Lord Chancellor in the Wilson Government of 1964-70, and so was the Chancellor under whom the Misrepresentation Act was passed.
This Government was the last British government of the post-war ‘Golden Age of capitalism', a historically unprecedented period of continued economic success on growth, employment and inflation measures that led to a confidence about state direction of economic and social policy which now seems so extravagant that it is difficult even to adequately understand it in the sociological sense of ‘recapturing an experience'.[601] The political aspiration of this Government remains identified with the speech, his first Conference speech as Leader of the Opposition, that Wilson had given to the 1963 Labour Party Conference, in which he saw his Party engaged ‘in redefining and... restating... Socialism in terms of the scientific revolution', in order to make that socialism adequate for ‘The Britain that is going to be forged in the white heat of [that] revolution'.[602] At a more general and proÂfound level, that aspiration was given theoretical expression by the Labour intelÂlectual and senior politician Tony Crosland, who held various offices as a Cabinet colleague of Lord Gardiner under Wilson.
Crosland's representative and at the time extremely influential views turned on his belief, as stated in 1956, that ‘the political authority has emerged as the final arbiter of economic life [and the] era of unfettered market relations is over', and so competent was this authority's ecoÂnomic management that ‘questions of economic efficiency' were no longer ‘of priÂmary importance' in a Britain which stood ‘on the threshold of mass abundance'.[603] Were he then to have been asked whether the UK continued to be ‘capitalist', CroÂsland would have answered ‘no'.[604] Though, so far as I am aware, Crosland did not directly refer to this most famous expression of post-capitalist belief within British economic thought, his views were entirely framed within Keynes' claim that ‘ the economic problem' was in the process of being solved.[605]This belief lies behind Hedley Byrne, albeit, I admit, at some considerable remove. In Hedley Byrne itself and in the cases such as Candler which led up to it, the appellate courts were conscious of law and convention which highly constrained judicial legislation, but the Lords in Hedley Byrne nevertheless did as
they did, and others have certainly enlarged upon their work.[606] They took this step because they felt compelled to extend compensation, right, justice, etc beyond the economic limitations which give the law of contract what they saw as its inherently defective shape, effectively regarding the huge possibilities of judicial legislation opened to the law of negligence by Donoghue as imposing a duty upon those who know what is right and have the power to correct what is wrong to take such steps. A process of disillusion, which can be argued to have first been manifested in the UK in the precipitous decline in the fortunes, reputation and morale of the 1964-70 Government,[607] now means that we rarely speak in such high-flown terms as Denning LJ's furthering of civilisation,[608] but the motivation of current appelÂlate reasoning about negligence is not substantially different from Denning LJ's in 1951 or Lord Devlin's in 1964. In all of this, ‘assumption of responsibility' has been used to misdescribe ‘imposition of liability', and it is disturbing that what it seems most apt to describe as a trick can be traced to one of the standing of Lord Devlin. Such a figure can act in such a way only when motivated by what one of the two greatest of modern philosophers has long shown to be a dreadfully deceptive lure: militant virtue.[609]
IV.