Henderson v Merrett Syndicates Ltd [1995] 2 AC 145 is a foundational House of Lords decision on professional negligence. Lord Goff's leading judgment settled a long-running debate about whether a professional bound by contract could also owe the same client a concurrent duty of care in the tort of negligence. The answer, decisively, was yes. That single point of principle drives much of how professional indemnity claims are pleaded, defended, and priced in the United Kingdom today.
The litigation arose from the losses suffered by Lloyd's Names in the late 1980s and early 1990s. Names underwrote insurance risks through syndicates run by professional managing agents. Members' agents advised individual Names on which syndicates to join. When catastrophic long-tail losses — asbestos, pollution, US casualty — flowed through those syndicates, thousands of Names sought to recover from the agents who had placed and managed the risks on their behalf.
The Names had contractual relationships with their agents, but many contract claims were at risk of being time-barred. The question that reached the House of Lords was whether the Names could instead sue in tort under the Hedley Byrne principle of assumption of responsibility, giving them the benefit of tortious limitation rules.
Lord Goff held that where a professional has assumed responsibility to a client for the exercise of care and skill — the test drawn from Hedley Byrne v Heller — a tortious duty of care arises. The existence of a contract between the same parties does not extinguish that tortious duty. The two duties run in parallel, and the claimant may choose which to sue on, subject to any contractual term that expressly excludes the tortious route.
Contract and tort are not alternatives forced upon the claimant by the shape of the relationship. They are concurrent causes of action, and the claimant selects the one that best suits the facts, the limitation position, and the measure of damages sought. Although Henderson itself concerned Lloyd's, Lord Goff framed the principle broadly enough to apply to all professional relationships.
The most important consequence is limitation. In contract, time runs from the date of breach — typically six years under the Limitation Act 1980. In tort, time generally runs from when loss is suffered, but the Latent Damage Act 1986 extends that period where the damage is not reasonably discoverable at the time it occurs.
Under the Latent Damage Act 1986, a negligence claimant has:
Contract claims get no equivalent extension for latent damage. That single difference can decide whether a claim is viable.
Assume an accountant negligently advises a client in 2015 on the tax treatment of a corporate transaction. The client relies on the advice, files returns accordingly, and suffers no visible loss for several years. In 2024, HMRC opens an enquiry, the error surfaces, and the client crystallises a substantial tax liability.
On a pure contract analysis, time began to run in 2015. The six-year contract limitation period expired in 2021 and the claim would be statute-barred. Under Henderson v Merrett, the client can plead the same facts in tort. The Latent Damage Act 1986 gives three years from the date the client had, or should have had, knowledge of the damage — 2024. A claim issued between 2024 and 2027 is within time, provided the 15-year long-stop from the 2015 advice has not expired. That is the difference between a claim that fails at the door and one that proceeds to trial. This is a hypothetical illustration, not advice on any particular facts.
Henderson v Merrett is one reason professional indemnity policies are written on a claims-made basis and priced with long-tail latent liability in mind. An accountant, solicitor, architect, or surveyor may face a valid claim years — sometimes more than a decade — after the underlying work was done. Insurers reserve for that tail, reflect it in premiums, and pay close attention to run-off cover when a firm ceases to trade.
Firms buying cover through Apex Insurance Brokers will see this reflected in the questions insurers ask about historic work. Sector arrangements for accountants, solicitors, and architects all reflect this long-tail character.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 724952. This entry is general information, not advice on any particular policy.