Cases decided on the basis of common law are likely to follow the precedence of earlier cases with similar facts. This means that whatever judges say becomes law and become binding for the subsequent trials in the lower courts unless the law is later developed or changed through the enactment of a statutory provision. In the case of Hedley Byrne, it had been earlier established at first instance that there was no scope for liability for negligent misstatements on the ground that there was an express disclaimer of responsibility therefore this dismissed any scope of liability. Similarly, at the court of appeal a comparable approach was taken and again McNair J held that the defendants were indeed negligent, however they owed no duty of care towards the appellants. However, it has been established that the English courts develop incrementally hence; the focus here will be on economic loss which was first illustrated in Hedley Byrne, how it has led to similar decisions in subsequent cases and how the law has developed ever since.

Prior to the extension of the law regarding negligent misstatements in Hedley Bynre, it was accepted that liability for negligent misstatements could only arise in exceptional circumstances. Hence it was submitted that liability could only arise in instances where one of the following categories were satisfied; there was a fiduciary relationship or where the relationship was contractual or that it must arise from the relationship of proximity. This principle was set out in the case of Candler v Crane, Christmas & Co[1].
However in the House of Lords, the decisions at first instance and the court of Appeal could be said to have been disregarded and the Lordships decided to take a different, extensive approach.

Lord Reid, in his judgement derived from Denning LJ’s dissenting judgement in Candler v Crane, Christmas & Co that a reasonable