Chaudhry v Prabhakar 1988: Free advice can cost you.

Areas of applicable law: Tort law – Duty of care – pure economic loss

Main arguments in this case: A duty of care can arise if the advice given by a person causes financial loss to another person even if there was not any damage or the advice was given in a social context.

The fact of the case: The case involves a relationship between the defendant and the claimant who were friends. The claimant was searching for a second-hand car and sought the defendant’s help since he supposedly had knowledge in this area. The claimant specifically requested that the car should not have been involved in an accident. The defendant recommended a car to the claimant despite visible damage, but he did not inquire about the cause of the damage. The car, as it turned out, was not roadworthy and had previously been involved in an accident, which the defendant was not aware of.

The claimant, relying on the defendant’s expertise, purchased the car but later discovered its worthlessness. As a result, the claimant instituted civil proceedings against the defendant, claiming damages for his negligent recommendation of an unroadworthy vehicle.

Verdict: The court of appeal ruled that the defendant was legally obligated to exercise a duty of care toward the claimant. This duty arose due to the claimant’s reliance on the defendant’s expertise and knowledge regarding cars, and subsequent actions taken based on this information. Essentially, the defendant had a responsibility to ensure that any information or advice provided to the claimant was accurate and that the claimant was not put in harm’s way as a result of any misinformation or errors on the defendant’s part. In essence, the court found that the defendant had a duty to act with reasonable care and skill in their dealings with the claimant, given the particular circumstances of their relationship and interaction.

The verdict in this particular case has been the subject of extensive criticism due to its deviation from the established legal principle set out in the case of Hedley Byrne. The case in question contradicts the decision in Hedley Byrne that a duty of care could only arise where the advice given and relied upon was made in a business context. This departure from the established legal principle has caused much consternation among legal scholars.

Furthermore, the decision in this case also appears to disregard the principle that advice given in a social context does not create legal liability. This principle has long been recognized in the legal system as a means of protecting individuals who provide casual advice in social situations from the burden of legal responsibility.

In addition to these concerns, the verdict also appears to have overlooked the principle of pure economic loss, which holds that a financial loss without damage cannot be recovered. This principle has been developed over many years and has played a critical role in shaping the legal system’s approach to cases involving financial loss.


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