Pure Economic Loss

Question 1

Cases where pure economic loss couldn’t be claimed under negligence

Answer 1

Spartan Steel and Weller v Foot and Mouth Disease Research Institute

Question 2

What two situations can negligent misstatement apply in

Answer 2

Two party liability - A giving B advice (Chaudry v Prabhakar)
Three party liability - A relaying advice to B who relays it to C. No contract between A and C. (Hedley Byrne)

Question 3

Rules for negligent misstatement following Hedley Byrne

Answer 3

1. Statement must be made negligently and
2. there is a relationship between the parties

Question 4

What is needed to prove a special relationship following Caparo?

Answer 4

1. Advice giver has or claims to have special skill / expertise
2. Advice is used and relied on by C. Must be sufficient proximity for D to expect C to rely on advice. (Raja v Gray)
3. Communicated directly, not through a newspaper or radio (floodgates)
4. D must know the purpose and that C won’t get further independent advice
5. Can’t have a disclaimer

Question 5

Can a special relationship exist for a social agreement?

Answer 5

Yes - Chaudry v Prabhakar