Pure economic loss

Question 1

What is pure economic loss?

Answer 1

Pure economic loss – no damage to claimants’ property or injury to their person – GENERAL RULE IS THAT ITS NOT RECOVERABLE

Consequential economic loss is - loss consequent on physical damage - lost salary because of broken leg

This is pure economic loss:
Loss where there is no damage to claimants property or injury to their person.

Types.
-economic loss not flowing from damage to person or property.
-OR loss arising from damage ti property of another
- OR
defective items.

• Not possible TO REOVER for cost of repairing an inherently defective item which has been categorised as pure economic loss.
• Property is not worth what you thought it was

Question 2

EXCEPTIONS TO Rule on pure economic loss?

Answer 2

General rule is that there is no duty of care in respect of pure economic loss.

If it’s a negligent act then the general rule remains

If, however it’s caused by:
- Pure economic loss caused by negligent statement
1. Hedley Byrne v Heller – HL decided in certain circumstances two party relations there could be liability for carless statements.
- Wills
1. White v Jones – solicitor has a duty to beneficiaries
- References
- Owes a duty to write an accurate reference

Question 3

Rules for negligent statement?

Answer 3

ONLY ONE TEST NEEDS TO BE SATISFIED.

Reasonable reliance
– Claimants relied on defendants’ advice (question of fact)
- Reasonable to rely on it
- Defendant ought to have known that the claimant was relying on their advice (question of fact)
* Take into account any special skill or knowledge held by defendant – Esso petroleum made an assertion that the pump would make a certain amount of money.

Assumption of responsibility
- - Did defendant hold themselves out as having relevant expertise.
- Defendant must communicate the advice to claimant
- Defendant must know the purpose
- Defendant must know or reasonably believe that the claimant will rely on this advice

Special relationship of trust and confidence between the parties

Disclaimer
- Subject to UCTA
- They also have to decide if the disclaimer is reasonable
- Did the parties have equal bargaining power
- Would it have been reasonably practicable to obtain advice from an alternative source
- How difficult was the task

Not all 3 have to be found, just one.