CURRENCY BROKERS AND THE DUTY OF CARE
| DOI | https://doi.org/10.1108/eb024880 |
| Published date | 01 February 1996 |
| Date | 01 February 1996 |
| Pages | 179-184 |
| Author | MR J.P. WADSWORTH QC,Joanna Gray |
| Subject Matter | Accounting & finance |
CASE LAW
CURRENCY BROKERS AND THE DUTY OF CARE
HALEY V NORTHINGTON ARCHIVES LTD (FIRST DEFEND-
ANT) AND STEPHEN MORRIS (SECOND DEFENDANT)
(HIGH COURT OF JUSTICE, QUEENS BENCH DIVISION) MR J. P.
WADSWORTH QC SITTING AS A DEPUTY JUDGE OF THE HIGH COURT
Date of Judgment: 15th November, 1995
Unreported
THE FACTS
This case involved foreign exchange
transactions conducted by the First
Defendants, a firm of commodities
traders then trading as LHW Futures
Ltd (LHW), on behalf of the Plaintiff
who was an individual investing his
own money in a private capacity. The
Second Defendant, Mr Morris, was at
all material times a senior account
executive with LHW and dealt with
the Plaintiff in relation to the transac-
tions at issue. The events giving rise
to this action occurred in the years
1984-85.
The trading contract
between LHW and a client would
involve the client paying over a sum
which would represent commission
and margin on the particular cur-
rency trade. The commission, at 2
per cent of the total contract value,
was high in comparison to other
traders because it was a feature of
these contracts that there would be
no further margin calls to the client
since an automatic stop loss mech-
anism was built in to the contract
which had the effect that a client's
total loss was limited to the amount
of the original margin. In theory a
client's profit on a currency contract
was unlimited but in practice merely
to break even and cover commission
required a substantial rise in the
price of the currency bought whereas
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