Legal Case Summary
JEB Fasteners Ltd v Marks Bloom & Co [1983] 1 All ER 583
Tort law – Negligence – Duty of care – Third party
Facts
JEB took control of a company. Marks Bloom & Co. (MBC) were the auditors for the business. One of the primary motivations behind taking over the company was that JEB would be able to acquire the services of two of the company directors. JEB understood at the time that they assumed control of the business that there were some errors with the accounts that had been audited by MBC. Throughout this process, MBC understood that JEB were taking the information in the accounts into their decision-making. The accounts were more inaccurate than JEB had realised and JEB subsequently claimed for damages. The judge, in the initial trial, dismissed JEB’s claim for damages. JEB appealed.
Issue
The issue for the court, in this case, was to understand whether there was a duty of care owed by MBC, the accountants, to JEB, the plaintiff. If this was established, it was important for the court to consider whether the accounts that had been created and maintained by MBC, had been relied upon to the detriment of the plaintiff.
Decision / Outcome
The court affirmed the decision of the trial judge who had dismissed JEB’s claim for damages. The court believed that there was a duty of care owed by MBC to JEB but that there was ample evidence that showed JEB had formed its own opinion on the accounts of the business. On this basis, the court held that JEB would have proceeded to take control of the company nonetheless and therefore they did not have a claim against MBC.
Updated 19 March 2026
This case summary accurately reflects the decision in JEB Fasteners Ltd v Marks Bloom & Co [1983] 1 All ER 583. The case remains good law and continues to be cited in discussions of negligent misstatement, the duty of care owed by auditors to third parties, and the requirement of reliance as an essential element of such claims. The principle that a duty of care may exist towards a third party who foreseeably relies on audited accounts, but that a claim will fail where reliance is not established on the facts, is consistent with the subsequent development of the law in this area, including Caparo Industries plc v Dickman [1990] 2 AC 605, which refined the test for auditors’ liability to third parties and remains the leading authority. Readers should note that Caparo introduced a more restrictive three-stage test (foreseeability, proximity, and fairness) and, in that context, significantly limited the circumstances in which auditors owe a duty of care to third-party investors or acquirers. The article does not mention Caparo, and students should be aware that JEB Fasteners is best understood alongside that later House of Lords decision. No statutory changes affect the core legal principles discussed.
