3. Economic loss

Question 1

background to economic loss

Answer 1

financial loss resulting from negligently inflicted injury to the person/prosper is ordinarily recoverable

BUT, pure economic loss is only recoverable in limited circumstances

restrictive approach: based on policy-economic loss is likely a loss of profit so more an issue for contract law (Spartan Steel)

EXCEPTION: liability for negligent misstatement

Question 2

explain liability for negligent misstatement

Answer 2

Hedley Byrne v Heller in appropriate circumstances, liability for pure economic loss can arise in relation to negligent provision of info or advice

guidelines have been added to Caparo v Dickman

there must be a SPECIAL RELATIONSHIP between the 2 parties based on the skill and judgement of D and the reliance placed upon it

Question 3

criteria for special relationship

Answer 3

(1) special skill or expertise
(2) voluntary assumption of responsibility for giving advice
(3) D knew C would rely on the advuce
(4) reasonable reliance on advice
(5) reliance on advice to detriment

Question 4

explain (1) special skill or expertise

Answer 4

(1) relationship where party giving advice was in business of giving advice of the sort

(2) business or professional relationship if C is genuinely seeking professional advice (Howard Marine v Dredging)

(3) NOT a purely social relationship UNLESS when established that carefully considered advice was being sought from a party with some expertise (Chaudry v Prabaker)

(4) common relationships: valuers accountants (Yianni v Edwin Evans & Sons)

(5) party giving advice is a specialist in the field or hold themselves out as possessing a comparable skill and competence (Mutual Life & Citizens v Evatt)

• the mere fact C pays for the advice is not enough (West Bromwich Albion FC v El-Safety)

Question 5

explain (2) voluntary assumption of responsibility for giving advice

Answer 5

Henderson v Merrett

Question 6

explain (3) D knew C would rely on advice

Answer 6

Caparo: Lord Bridge “necessary to show that D knew his statement would be communicated to C… and that C would be very likely to reply on it”

Question 7

explain (4) reasonable reliance on advice

Answer 7

no liability unless C relied on advice given

if reliance is foreseeable it will be reasonable (Caparo)

not foreseeable if C belongs to a large gc of potential claimants (Goodwill v BPAS)

Question 8

explain (5) reliance on advice to detriment

Answer 8

lost money (Caparo)

(add breach/cause of damage)