pure economic loss Flashcards
What are the different categories of economic loss?
- physical damage
- consequential economic loss
- pure economic loss
Define physical damage as an economic loss category.
actual physical damage occurs where C’s person or property are damaged
- Recoverable !
Define consequential economic loss.
financial losses suffered as a result pf physical damage
- recoverable!
Define pure economic loss.
Economic loss that arises where there has been no damage to the claimant’s property or injury to their person.
- Pure economic losses are NOT recoverable!
What 3 elements fall within the definition of pure economic loss?
1- Economic loss not flowing from damage to person or property
2. Loss arising from damage to the property of another
3. Defective items
What is the general rule of duty of care for pure economic loss?
The general rule is that no duty of care is owed in respect of pure economic loss.
What’s the key case for pure economic loss?
Spartan Steel v Martin & Co Ltd
What are the 3 exceptions to the general rule of no duty in pure economic loss?
1- pure economic loss caused by negligent statements
2- wills
3- references
What is meant by wills being an exception to the duty rule in pure economic loss?
In these cases, there is a relationship between the solicitor and the testator, but if there is negligence in relation to a will it is the beneficiary (not the testator) who suffers a loss.
- A solicitor therefore owes a duty to the beneficiary in order to achieve practical justice.
What is meant by references being an exception to the duty rule in pure economic loss?
a duty of care owed to the subject of the reference to provide an accurate reference. By giving a reference, the company assumed a responsibility to the claimant to exercise reasonable skill and care in the preparation of the reference.
what did the case of Hedley establish?
had it not been for the responsibility disclaimer, D would have owed a duty of care to C for their pure economic loss.
Which 3 key concepts/tests were discussed when establishing a duty of care for negligent misstatement within pure economic loss?
1- a special relationship between C&D
2- assumption of responsibility by D; and
3- reasonable reliance placed by C on D’s statement.
What is the test for reasonable reliance within duty for pure economic loss?
- C relied on D’s advice.
- Reasonable for the claimant to rely on the defendant’s advice (special skill/knowledge of d/c; general context; and other relevant
factors). - D knew/ought to know C was relying on the advice
A friend of Trevor’s provides him with a survey report for a house Trevor wants to buy. Trevor reads the report and buys the house. His friend failed to spot structural movement in the floorboards. The value of the house decreases by £100,000. What claim does he have?
Trevor has suffered pure economic loss caused by a negligent misstatement
Which case authority gave guidelines for the criteria to apply when determining whether the defendant assumed responsibility for the correctness of their statement to the claimant? What were these guidelines?
Caparo Industries plc v Dickman and others.
Guidelines: the defendant communicated advice to the claimant or knew it would be; the defendant knew the purpose for which the claimant would use the advice; the defendant knew or reasonably believed the claimant would rely on the advice; and the claimant acted on the advice to their detriment.
