Law of Tort- Economic Loss Flashcards
What is consequential economic loss?
Economic loss by direct consequence of the tort; for example, costs of hiring a replacement vehicle. This can be claimed.
What is pure economic loss?
Financial loss not caused by the tort; for example, any profit loss suffered by the business whilst they are unable to operate. This can not be claimed.
When can pure economic loss be claimed?
In cases of negligent misstatement, when a special relationship is established
What was held in Spartan Steel v Martin?
The Court of Appeal established that Spartan Steel could not claim for the loss of profit on the melts as it was pure economic loss.
Why can pure economic loss not be recovered?
It is too remote and outside the scope of duty of care.
What was held in Weller v Foot and Mouth Disease Research?
The loss of income and profit was judged to be pure economic loss and not recoverable through law.
What is a negligent misstatement?
A person or business acts on negligent advice and loses money as a result. There is two-part liability and three-part liability. There must be a ‘special relationship’ proved.
What is two-part liability in negligent misstatement?
Where A gives advice to B, with no contract, and B suffers a loss relying on it.
What is three-part liability in negligent misstatement?
A makes a statement to B, B communicates it to C and C suffers a loss with no contractual relationship with A.
What is the special relationship test for negligent misstatement in Caparo v Dickman?
- Expert
- Claimant acts on advice given
- Person giving advice must know it will be used for a purpose
- There is no disclaimer to act as a defence
What happened in Hedley Byrne v Heller?
An advertising agency was approached by Easipower to place adverts in newspapers. They requested a bank reference from Easipower’s bank. Hedley Byrne went ahead with the campaign, but Easipower went bankrupt before the fee could be paid. Hedley claimed against Easipower’s bank for negligent misstatement.
